The effect of the minimum wage on children's cognitive achievement

Abstract

At the center of the minimum wage debate is its role in improving the welfare of low-income families. However, there is little empirical evidence of whether minimum wage changes actually affect those families’ children. This paper examines the effect of the minimum wage on the math and reading achievement levels of children with low socioeconomic status whose parents are most likely to be affected by the minimum wage, comparing with children in households with high socioeconomic status. Estimates show that a $1 minimum wage increase reduces children's math and reading scores by approximately 0.10–0.19 standard deviations. Further, there is evidence that increases in the minimum wage lead to deterioration in the home environment, which may be one potential mechanism underlying my main findings.