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Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity

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  • David Neumark
Abstract
I review evidence on alternative labor market policies that could potentially improve economic self-sufficiency via mandating higher wages, subsidizing employment, or increasing productivity. The evidence indicates that the minimum wage is an ineffective policy to promote economic self-sufficiency, entailing employment losses without any corresponding distributional benefits via higher wages. In contrast, living wage laws appear to present a more favorable tradeoff. Labor supply incentives, in particular the EITC, appear effective, as a more generous EITC boosts employment of single mothers and in so doing raises incomes and earnings of low-income families. There is some evidence that wage subsidies increase employment and earnings, but problems of stigmatization resulting from eligibility for wage subsidy programs can dissipate the gains, and wage subsidies entail substantial administrative difficulties. Finally, a newer but growing literature on school-to-work provides some evidence that school-to-work programs boost labor market attachment, skill formation, wages, and earnings.

Suggested Citation

  • David Neumark, 2009. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity," NBER Working Papers 14807, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14807
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    Cited by:

    1. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    2. Judith K. Hellerstein & David Neumark, 2011. "Employment in Black Urban Labor Markets: Problems and Solutions," NBER Working Papers 16986, National Bureau of Economic Research, Inc.
    3. Wozniak, Marcin, 2016. "Job placement agencies in an artificial labor market," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-54.

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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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