TY  - JOUR
AU  - Autor,David H.
AU  - Manning,Alan
AU  - Smith,Christopher L.
TI  - The Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16533
PY  - 2010
Y2  - November 2010
UR  - http://www.nber.org/papers/w16533
L1  - http://www.nber.org/papers/w16533.pdf
N1  - Author contact info:
David Autor
Department of Economics
MIT, E52-371
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/258-7698
Fax: 617/253-1330
E-Mail: dautor@mit.edu

Alan Manning
Economics Department
London School of Economics
Houghton Street
London WC2A 2AE
Tel: 011 020 7955 6078
E-Mail: a.manning@lse.ac.uk

Christopher Smith
Federal Reserve Board
Research Division
Stop # 80
20th & C Sts., NW
Washington, DC 20551-0001
E-Mail: Christopher.L.Smith@frb.gov
AB  - We reassess the effect of state and federal minimum wages on U.S. earnings inequality, attending to two issues that appear to bias earlier work: violation of the assumed independence of state wage levels and state wage dispersion, and errors-in-variables that inflate impact estimates via an analogue of the well known division bias problem.  We find that erosion of the real minimum wage raises inequality in the lower tail of the wage distribution (the 50/10 wage ratio), but the impacts are typically less than half as large as those reported in the literature and are almost negligible for males. Nevertheless, the estimated effects of the minimum wage on points of the wage distribution extend to wage percentiles where the minimum is nominally non-binding, implying spillovers.  We structurally estimate these spillovers and show that their relative importance grows as the nominal minimum wage becomes less binding. Subsequent analysis underscores, however, that spillovers and measurement error (absent spillovers) have similar implications for the effect of the minimum on the shape of the lower tail of the measured wage distribution. With available precision, we cannot reject the hypothesis that estimated spillovers to non-binding percentiles are due to reporting artifacts.  Accepting this null, the implied effect of the minimum wage on the actual wage distribution is smaller than the effect of the minimum wage on the measured wage distribution.
ER  -