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Date: 2022-01-01

Creator: Levi McAtee

Access: Open access

Do minimum wage increases serve as stepping-stones to higher-paying jobs for low-pay workers? This paper analyzes the impact of state minimum wage policy on the one-year wage growth rates of individuals across the wage distribution and whether that impact changes for individuals in highly monopsonistic industries. I review the recent literature on the disemployment effect, the impact of the minimum wage on wage growth rates, the nature of monopsonistic industries, and the relationship between the minimum wage and monopsony power. I offer theoretical reasons why the minimum wage may impact the wage growth rates of individuals in monopsonistic industries differently than it impacts those of individuals in competitive industries. I then re-estimate Lopresti’s and Mumford’s (2016) panel fixed effects model to determine how the effect of a minimum wage increase depends nonlinearly on the size of the increase. Using data from 2005-2008, Lopresti and Mumford found that small minimum wage increases have a significant negative impact on wage growth rates, while large minimum wage increases have a significant positive impact. Using data from 2016-2019, I find similar results. As my primary empirical contribution, I test whether individuals in highly monopsonistic industries experience minimum wage changes differently than individuals in more competitive industries. I find monopsony power in the form of high labor immobility primarily impacts the wage growth rates of high-pay workers and does not influence how low-pay workers experience minimum wage changes. Finally, I recommend policymakers impose larger minimum wage increases to avoid impeding the wage-growth of low-pay workers.

Date: 2022-01-01

Creator: Isabel Krogh

Access: Open access

Income inequality and intergenerational mobility are two common measures of economic fairness in society. While they measure distinct ideas, they are significantly related in an inverse way across countries as well as across regions in the United States. This relationship is illustrated on the Great Gatsby Curve. Unequal access to education is one factor that has been found to drive the negative relationship between these two measures and therefore create the negatively sloping Great Gatsby Curve. Therefore, creating more equal access to education, such as through government spending, could lessen the connection between these two factors. The primary purpose of this research is to explore the effect of public educational expenditure on intergenerational mobility as well as on the slope of the Great Gatsby Curve. At the primary/secondary education level, this study finds that places with higher public spending on education tend to have higher levels of intergenerational mobility. However, no significant relationship is found between spending on tertiary education and intergenerational mobility. In addition, while higher primary/secondary educational spending is associated with a flatter Great Gatsby Curve at the school district level, these results were not consistent at the commuting zone level, so no strong conclusions can be made about the effect of public educational expenditures as a mediating factor of the Great Gatsby Curve.