Figure 1a: Wage Distribution Density Estimates: Men, Minimum Minimum 0.60 Density

Transcription

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46 Figure 1a: Wage Distribution Density Estimates: Men, Minimum Minimum 0.60 Density log(wage)-log(median) Note: Data are from the CPS Merged Outgoing Rotation Earnings Files. The sample in each year is all men with positive earnings. Each observation has, at least, a nonmissing value for the unedited hourly wage variable, or nonmissing values for the unedited usual weekly earnings and usual hours per week variables. The wage for each individual is either the reported hourly wage or the average wage computed from the

47 1.30 Figure 1b: Wage Distribution Density Estimates: Women, Minimum Minimum Density log(wage) - log(median) Note: Data are from the CPS Merged Outgoing Rotation Earnings Files. Women only. For sample selection, and variable construction, see note to Figure 1a. Kernel density estimates use a Gaussian kernel with bandwith of.050 for 1979, and.061 for The estimates are hours-weighted.

48 0.90 Figure 1c: Wage Distribution Density Estimates: Men and Women, Minimum Minimum Density log(wage) - log(median) Note: Data are from the CPS Merged Outgoing Rotation Earnings Files. Men and Women pooled. For sample selection, and variable construction, see note to Figure 1a. Kernel density estimates use a Gaussian kernel with bandwith of.055 for 1979, and.059 for The estimates are hours-weighted.

49 0.20 Figure 2: Selected Percentiles of the Wage Distribution, Minimum wage, Relative to the Median: Change in Differential (logs) Minimum wage 5th Pctile 10th Pctile 25th Pctile 75th Pctile 90th Pctile Year Note: Data are from the CPS Merged Outgoing Rotation Earnings Files. For sample selection and variable construction, see Figure 1c. Percentiles are calculated from kernel density estimates for each year.

50 1.10 Medium Figure 3a: Wage Distribution Density Estimates: Low-, Medium-, and High-wage states, 1979 Low High Low-wage Medium-wage High-wage 0.70 Density log(wage)-log(median) Note: Vertical lines are the relative value of the federal minimum wage. Data are from the CPS Merged Outgoing Rotation Earnings Files. Low-wage states are: Arkansas, Mississippi, Vermont, Maine, South Carolina, South Dakota, and North Carolina. Medium-wage states are: Idaho, Oklahoma, Kentucky, Kansas, Virginia, Missouri, Indiana. High-wage states are: Oregon, Wyoming, California, Illinois, Maryland, Michigan, and Washington. The groups are based on a ranking of mean log(wage). For variable

51 1.10 Figure 3b: Wage Distribution Density Estimates: Low-, Medium-, and High-wage states, Medium High Low Low-wage Medium-wage High-wage Density log(wage)-log(median) Note: Vertical lines represent the relative values of the federal minimum wage. Data are from the CPS Merged Outgoing Rotation Earnings Files. Low-wage states are: Mississippi, South Dakota, Arkansas, West Virginia, Alabama, Idaho, Nebraska. Medium-wage states are: Kansas, Texas, Utah, Wyoming, Georgia, Maine, Vermont. High-wage states are: New Hampshire, California, Maryland, New York, Massachusetts, Connecticut, New Jersey. The groups are based on a ranking of mean log(wage). For variable construction,

52 -0.30 Figure 4a: Minimum wage decline, growth in latent wage dispersion, "Censoring" case log wage differential C B A log(min.wage)-log(median) Note: Theoretical relation between log-wage differential and relative minimum wage across states under a strict censoring model. Line A represents the initial period. Shift from A to B reflects a fall in the relative level of the federal minimum wage. Shift from B to C reflects an increase in "latent" wage

53 -0.30 Figure 4b: Minimum wage decline, growth in latent wage dispersion with minimum wage "spillovers" log-wage differential log(min.wage) - log(median) Note: Theoretical relation between log-wage differential and relative minimum wage across states with spillover effects. Upper line represents the initial period. Lower line reflects a fall in the minimum wage and a small increase in latent wage dispersion for all states.

54 Figure 4c: Minimum wage decline, growth in latent wage dispersion, "Truncation" case High Low log(wage) differential log(min. wage) - log(median) Note: Figure shows plots the measured log(wage) differential against the log(min. wage)-log(median) under a strict truncation model in two periods: 1) where the differential of the latent wage distribution is in all states, and 2) where the differential is Kernel density estimates of the log(wage) distribution of the state of New York in 1989 is used as the latent wage distribution; the distribution is appropriately scaled to yield the two periods (high and low wage dispersion).

55 Figure 5: Wage Dispersion and the Minimum wage, Across states, 1979 and OLS fit log wage differential log(min.wage)-log(median) Note: Data are from the CPS Merged Outgoing Rotation Earnings Files. For sample selection and variable construction, see Figure 1c. States with specific minimum wage laws higher than the federal minimum are excluded; thus, 5 states (Maine, New Hampshire, Connecticut, Massachusetts, and Rhode

56 Figure 6a: 10-50, 20-50, log-wage differentials and the Minimum Wage across states, 1979 and Percentile log wage differential diff diff diff. OLS fit log(min.wage)-log(median) Note: See Figure 5.

57 Figure 6b: Measured log(wage) diff. and log(min. wage)-log(median), Censoring and truncation models Truncation Censoring log(wage) differential log(min. wage) - log(median) Note: Figure shows plots the measured log(wage) differential against the log(min. wage)-log(median) under two cases: 1) a strict censoring model, and 2) a truncation model. Kernel density estimates of the log(wage) distribution of the state of New York in 1989 is used as the latent wage distribution; the distribution is appropriately scaled to yield a differential of 0.35.

58 Figure 6c: log-wage differentials and the Minimum Wage across states, 1979 and diff. OLS fit log wage differential log(min.wage)-log(median) Note: See Figure 5.

59 0.20 Figure 7a: Log(wage) changes , by percentile: Men, Women, and All, unadjusted 0.15 All Men Women 0.10 log-wage change Percentile Note: Constructed from the CPS Outgoing Rotation Earnings Files. For sample selection and variable construction, see Figures 1a, 1b, and 1c. Percentiles are hours-weighted. Wages in 1989 are deflated by the growth in the overall median.

60 Figure 7b: Log(wage) changes , by percentile: Men, Women, and All, adjusted for minimum wage All Men Women 0.10 log-wage change Percentile Note: Constructed from the CPS Outgoing Rotation Earnings Files. For sample selection and variable construction, see Figure 1c. Micro-data are adjusted for the minimum wage effect, using estimates from regressions from the state panel data set. Details of this adjustment procedure is provided in the text. Percentiles are hours-weighted. Wages in 1989 are deflated by the growth in the overall median.

61 Table 1: Minimum wage legislation status, by state: Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina

62 Table 2a: OLS Regressions of differential on Minimum Wage, full sample of states Variable (1) (2) (3) (4) (5) (6) Year dummies (0.007) (0.004) (0.003) (0.003) (0.006) (0.004) (0.007) (0.005) (0.004) (0.004) (0.007) (0.005) (0.007) (0.007) (0.004) (0.004) (0.007) (0.007) (0.007) (0.007) (0.005) (0.005) (0.007) (0.007) (0.007) (0.008) (0.007) (0.006) (0.008) (0.009) (0.007) (0.010) (0.008) (0.008) (0.008) (0.011) (0.010) (0.012) (0.010) (0.011) (0.010) (0.012) (0.010) (0.014) (0.012) (0.011) (0.009) (0.015) (0.011) (0.017) (0.013) (0.013) (0.010) (0.019) Minimum (0.050) (0.163) (0.145) (0.146) (Minimum) (0.121) (0.109) (0.109) No state law (0.012) (0.008) (0.043) State < Fed (0.009) (0.007) (0.007) State > Fed (0.019) (0.017) (0.011) State dummies No No No No Yes Yes 2

63 Table 2b: OLS Regressions of differential on Minimum Wage, sub-sample of states Variable (1) (2) (3) (4) (5) (6) Year dummies (0.008) (0.005) (0.004) (0.004) (0.008) (0.005) (0.010) (0.007) (0.005) (0.005) (0.010) (0.007) (0.009) (0.008) (0.005) (0.005) (0.009) (0.008) (0.009) (0.009) (0.005) (0.005) (0.010) (0.007) (0.009) (0.011) (0.006) (0.007) (0.009) (0.010) (0.008) (0.013) (0.009) (0.009) (0.009) (0.012) (0.011) (0.016) (0.011) (0.011) (0.013) (0.013) (0.009) (0.018) (0.013) (0.013) (0.012) (0.016) (0.011) (0.021) (0.015) (0.015) (0.013) (0.020) Minimum (0.073) (0.096) (0.101) (0.146) (Minimum) (0.080) (0.075) (0.085) No state law (0.015) (0.009) (0.020) State < Fed (0.013) (0.009) (0.010) State dummies No Yes Yes R

64 Table 3a: OLS Regressions of 20-50, 30-50, differentials on Minimum wage, pooled cross-section Variable differential differential differential Year dummies (0.004) (0.004) (0.005) (0.005) (0.006) (0.005) (0.004) (0.004) (0.004) (0.004) (0.004) (0.004) (0.004) (0.004) (0.005) (0.005) (0.004) (0.004) (0.006) (0.006) (0.004) (0.004) (0.004) (0.004) (0.007) (0.008) (0.004) (0.006) (0.004) (0.005) (0.006) (0.009) (0.004) (0.006) (0.004) (0.005) (0.007) (0.010) (0.004) (0.007) (0.004) (0.004) (0.007) (0.012) (0.005) (0.008) (0.004) (0.005) (0.006) (0.014) (0.005) (0.009) (0.004) (0.006) Minimum (0.144) (0.110) (0.056) Minimum (0.106) (0.080) (0.041) Slope at average Minimum R

65 Table 3b: OLS Regressions of 20-50, 30-50, differentials on Minimum wage, fixed effects specification Variable differential differential differential Year dummies (0.004) (0.004) (0.005) (0.005) (0.006) (0.006) (0.004) (0.004) (0.004) (0.004) (0.005) (0.004) (0.004) (0.006) (0.005) (0.007) (0.004) (0.006) (0.006) (0.007) (0.004) (0.007) (0.004) (0.005) (0.008) (0.009) (0.004) (0.008) (0.005) (0.007) (0.007) (0.011) (0.005) (0.010) (0.005) (0.008) (0.008) (0.011) (0.004) (0.011) (0.005) (0.009) (0.008) (0.015) (0.005) (0.012) (0.005) (0.010) (0.007) (0.017) (0.006) (0.013) (0.005) (0.011) Minimum (0.115) (0.085) (0.056) Minimum (0.087) (0.063) (0.041) Slope at average Minimum R

66 Table 4: OLS Regressions of 20-50, 30-50, 40-50, 60-50, 70-50, log-wage differentials, pooled cross-section and fixed effects specification Coefficient on Minimum Pooled Cross-section (0.044) (0.032) (0.016) (0.012) (0.018) (0.028) Fixed Effects Specification (0.064) (0.049) (0.031) (0.030) (0.040) (0.049) Note: Data are constructed from the CPS Merged Outgoing Rotation Earnings Files. See note to Figure 2a. Reported are the coefficients on the minimum wage variable in regressions including time dummies for the first row, and time and state dummies for the second row. Regressions also include state minimum wage status dummies, as defined in Table 2a. Estimation is OLS, weighted by the number of observations in the state-year. Standard errors (in parentheses) are heteroskedasticity-consistent and consistent with unrestricted auto-correlation within-state.

67 Table 5: Means of 5-50 differential and minimum wage, by state minimum wage status: Year Minimum Wage 5-50 differential State > Fed State<=Fed State > Fed State<=Fed (0.023) (0.024) (0.025) (0.013) (0.021) (0.024) (0.018) (0.015) (0.025) (0.024) (0.023) (0.018) change N Note: Data are constructed from the CPS Merged Outgoing Rotation Earnings Files. For sample selection and earnings variable construction, see note to Figure 1c. Whenever possible, each year begins on April and ends in March the next year (1989=April/89 - March/90). Because of the variation in when state minimum laws came into effect, for some states, the year begins on a different month. Full details on the exact months are available from the author. "State>Fed" means that the state had a minimum wage that was higher than the federal minimum in "State<=fed" means that the state had a minimum wage that was equal to or less than (or had no state minimum wage provision) the federal minimum in Standard Errors are in parentheses.

68 Table 6a: OLS Regressions of 5-50 differential on minimum wage, Variable State fixed effects No state fixed effects Year dummies (0.007) (0.009) (0.006) (0.006) (0.014) (0.013) (0.012) (0.009) Minimum (0.411) (0.333) Minimum (0.225) (0.190) Slope at average Minimum State dummies Yes Yes No No R N Note: Data are constructed from the CPS Merged Outgoing Rotation Earnings Files. For sample selection and earnings variable construction, see note to Figure 1c. For further details on construction of the data, see note to Table 5. Estimation is OLS, weighted by the number of observations in the state-year. Standard Errors (in parentheses) are heteroskedasticityconsistent and consistent with unrestricted auto-correlation within-state. Slope at average minimum is the slope evaluated at -.897, the average of mw in the period.

69 Table 6b: OLS Regressions of differential on minimum wage, Variable State fixed effects No state fixed effects Year dummies (0.008) (0.008) (0.007) (0.008) (0.012) (0.013) (0.010) (0.011) Minimum (0.244) (0.395) Minimum (0.137) (0.214) Slope at average Minimum Slope at avg. Min ( estimate) State dummies Yes Yes No No R N Note: Data are constructed from the CPS Merged Outgoing Rotation Earnings Files. For sample selection and earnings variable construction, see note to Figure 1c. For further details on construction of the data, see note to Table 5. Estimation is OLS, weighted by the number of observations in the state-year. Standard Errors (in parentheses) are heteroskedasticityconsistent and consistent with unrestricted auto-correlation within-state. Slope at average minimum is the implied slope evaluated at , the average of mw in the period; the first row of implied slopes use the coefficients in this table, while the second row uses coefficents from column (4) of Table 2a.

70 Table 7: OLS Regressions of 20-50, 30-50, 40-50, 60-50, 70-50, log-wage differentials on minimum wage and median, Coefficient on Minimum Fixed Effects Specification (0.112) (0.084) (0.079) (0.049) (0.043) (0.068) Pooled Cross-section (0.051) (0.031) (0.019) (0.016) (0.026) (0.027) data (0.034) (0.023) (0.012) (0.007) (0.009) (0.017) Note: Data are constructed from the CPS Merged Outgoing Rotation Earnings Files. See note to Figure 6a. Reported are the coefficients on the minimum wage variable in regressions including time dummies for the first row, and time and state dummies for the second row." data" refers to regression using the data where mw lies between and -0.56, the range of the data; the pooled crosssection specification is used. All estimation is OLS, weighted by the number of observations in the state-year. Standard errors (in parentheses) are heteroskedasticity-consistent and consistent with unrestricted autocorrelation within-state.

71 Table 8a: Wage differentials, actual and adjusted for minimum wage: Men, Actual Adjusted (1979 Min.) (1989 Min.) (1989 Min.) Year All Men White Black Yrs. Exp HSDO HS SOMECOL COL Yrs. Exp HSDO HS SOMECOL COL Return to Education RMSE RMSE (2) (2) Change from 1979 Actual Change from 1979 (at 1989 Minimum) Black-White (21-30 yrs) - (1-10 yrs.) COL-HS, (1-10 yrs.) COL-HSDO, (1-10 yrs.)

72 Table 8b: Wage differentials, actual and adjusted for minimum wage: Women, Actual Adjusted (1979 Min.) (1989 Min.) (1989 Min.) Year All Women White Black Yrs. Exp HSDO HS SOMECOL COL Yrs. Exp HSDO HS SOMECOL COL Return to Education RMSE RMSE (2) (2) Change from 1979 Actual Change from 1979 (at 1989 Minimum) Black-White (21-30 yrs) - (1-10 yrs.) COL-HS, (1-10 yrs.) COL-HSDO, (1-10 yrs.)

73 Table A1: Minimum wage (relative to median), state-level data summary statistics: unadjusted, and adjusted for Unadjusted Data Adjusted Data Year Mean Std. Dev. Mean Std. Dev Total Note: N = 50 for each year. State-level data constructed from the CPS Outgoing Rotation Earnings Files. For sample selection and variable construction, see Figure 1c. Minimum wage measure for each state is the log of the higher of the state or federal minimum wage minus the log of the median (hours-weighted) of that state. Adjusted data are constructed by re-weighting the data to control for across-state and across-year variation in the characteristics of earners, such as education, age gender, industrial and occupational affiliation. Details are in the text.

74 Table A2: OLS Regressions of differential on Minimum Wage, full sample of states, adjusted data Variable (1) (2) (3) (4) (5) (6) Year dummies (0.006) (0.004) (0.003) (0.003) (0.006) (0.004) (0.007) (0.005) (0.004) (0.004) (0.007) (0.005) (0.007) (0.006) (0.004) (0.004) (0.007) (0.007) (0.007) (0.008) (0.006) (0.006) (0.007) (0.008) (0.007) (0.009) (0.008) (0.008) (0.007) (0.010) (0.006) (0.011) (0.009) (0.009) (0.007) (0.012) (0.007) (0.013) (0.011) (0.011) (0.008) (0.012) (0.008) (0.015) (0.013) (0.011) (0.008) (0.015) (0.008) (0.015) (0.012) (0.011) (0.008) (0.017) Minimum (0.053) (0.228) (0.213) (0.180) (Minimum) (0.155) (0.148) (0.125) No state law (0.012) (0.006) (0.027) State < Fed (0.009) (0.006) (0.006) State > Fed (0.016) (0.016) (0.012) State dummies No No No No Yes Yes 2