Interpreting Minimum Wage Effects on Wage Distributions : A Cautionary Tale

We develop a behavioral model that can be utilized with wage data collected before and after a change in the statutory minium wage to determine whether the change was welfare-improving or not. The tests we develop are nonparametric and are implemented using bootstrap methods. We present some empirical evidence that the 1997 minimum wage change from $4,75 to $5,15 in the U.S. increased welfare in the population of youths aged 16-24 but that the 1996 change from $4,25 to $4,75 did not.