Abstract
In recent years, state and local government officials have responded to rising public support for a higher minimum wage by introducing legislation that would boost the wage floor in their respective jurisdictions. These recent minimum wage increases make a thorough analysis of such a policy imperative. This thesis contributes to the vast minimum wage literature by examining the impact that state minimum wage increases had on poverty rates for 47 of the contiguous US states from 2003 to 2012 by implementing several regression techniques that researchers have used in prior studies. Specifications include various fixed effects models, random effects models, regressions that account for spatial heterogeneity, regressions that examine the sensitivity of the results to the definition of poverty, and two stage least squares (TSLS) regressions. When using TSLS to account for minimum wage endogeneity, the results of the analysis indicate that minimum wage increases may be an effective policy tool to lower poverty rates. The analysis indicates that the decline in poverty rates following a 10% increase in the real minimum wage ranges between 8.6% and 10%.