The "Poverty trap" and living wage laws

Richard S. Toikka, Aaron Yelowitz, Andre Neveu

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


Advocates of living wage laws claim wage mandates will help families escape poverty by increasing family earnings beyond the poverty line. This article examines such programs and the effect a change in pay would have on taxes and benefits for low-income families in cities where living wage laws have been enacted or considered. Many families living with earnings below the poverty line take advantage of programs specifically designed to help them out of poverty. Phase-out rates of benefit programs are structured so that additional earnings from living wages largely disappear through benefit reduction and increased taxation. The living wage appears to be badly targeted and ineffective at raising comprehensive disposable income. Such vanishing benefits reduce the ability of living wage laws to reduce poverty. Nearly 75% of those affected by the living wage were not initially in poverty, and more than 40% had initial incomes at least twice the poverty line.

Original languageEnglish
Pages (from-to)62-79
Number of pages18
JournalEconomic Development Quarterly
Issue number1
StatePublished - Feb 2005


  • Employment
  • Living wage
  • Low income
  • Marginal taxt rate
  • Poverty
  • Transfer programs
  • Welfare

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics
  • Urban Studies


Dive into the research topics of 'The "Poverty trap" and living wage laws'. Together they form a unique fingerprint.

Cite this