Heterogeneous Impact of the Minimum Wage: Implications for Changes in Between- and Within-group Inequality

Abstract: Workers who earn at or below the minimum wage in the United States are mostly either less educated, young, or female. Little is known, however, concerning the extent to which the minimum wage influences wage differentials among workers with different observed characteristics and among workers with the same observed characteristics. This paper shows that changes in the real value of the minimum wage over recent decades have affected the relationship of hourly wages with education, experience, and gender. The results suggest that changes in the real value of the minimum wage account in part for the patterns of changes in education, experience, and gender wage differentials and mostly for the patterns of changes in within-group wage differentials among female workers with lower levels of experience.