Why minimum wage increases are a poor way to help the working poor

Arbeitspapier

Minimum wage increases are not a very effective mechanism for reducing poverty. They are not related to decreases in poverty rates. They can cost some low-income workers their jobs. And most minimum wage earners who gain from a higher minimum wage do not live in poor (or near-poor) families. A better tool for reducing poverty, and at lower cost, is the earned income tax credit. It is a much more targeted way to provide income to workers in poor families. It raises the wages of only workers in low-income families and rises with the number of dependent children in a family.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Policy Paper ; No. 86

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Labor Contracts ; Monopsony; Segmented Labor Markets
• Subject: minimum wage ; earned income tax credit ; working poor

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Burkhauser, Richard V.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/104981
• Last update: 10.03.2025, 11:42 AM CET