Abstract
•The paper investigates the relationship between the minimum wage and children’s math and reading test scores.•An increase in the minimum wage negatively affects the test scores of children with low socioeconomic status.•For children with high socioeconomic status, I find no statistically significant effect.•Results suggest a decline in the home environment as a potential mechanism.
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.