Economics Seminar - The Effect of the Minimum Wage on Children's Cognitive Achievement

To the center of the minimum wage debate is its role in improving the welfare of low-income families. Yet there is little empirical evidence of the way in which the minimum wage affects those families' children. This paper examines the minimum wage's effect on children's math and reading achievement, employing a child-fixed effects model. My baseline estimates show that a $1 minimum wage increase reduces math and reading scores by approximately 0.13-0.18 standard deviations for children with low socioeco-nomic status whose parents are most likely to be affected by the minimum wage. In contrast, for children with high socioeconomic status, I find no statistically signicant effect. These results are robust to several alternative specifications, including models that compare children of minimum wage workers to children of earners outside the minimum wage. Further, I find evidence that the minimum wage leads to deterioration in the home environment as measured by home assessment scores, suggesting this is a potential mechanism of the minimum wage's adverse effects on children's cognitive achievement.