If anything, minimum wage has a negative effect on less wealthy families---it’s not redistributive

Finally, this research turns to estimating the minimum wages' distributional effects on household net incomes using the model from Equation (2). This part of the research aims to test whether the relative size of the minimum wage—measured using the same two-bite statistics—has a significant positive effect on the mean income earned by individuals located up to and including a particular percentile of the family income distribution. The results as seen in Table 4 include states from all three bite areas (Low, Med, and High). Due to potential issues regarding parallel trends when including the High bite states, the same model is also analyzed excluding those states and these results can be found in Table 5 in Appendix B. Based on our model, the minimum wage does not appear to decrease inequality by lifting the incomes of individuals located in the bottom half of the income distribution. Instead, it appears that the minimum wage's bite –measured both using the Fraction and Kaitz index—has a negative but insignificant effect on the mean household wage earned by people in this lower half of the family income distribution. Therefore, this research does not find evidence to reject the null hypothesis that there is no effect of the minimum wage on the mean family income of households located in the bottom 50% of the family income distribution.

Similar to the results described above for individuals located in the lower half of the family income distribution, it also appears that the size of the minimum wage's bite has a negative and statistically insignificant effect on the mean family income earned by individuals located in the bottom 20% of the family income distribution. Therefore, similar to the minimum wage’s effect on households located in the bottom half of the distribution, this research cannot reject the null hypothesis that there is no effect of the minimum wage on the mean family income of households located in the bottom 20% of the family income distribution. Furthermore, when applying the model from Equation (2) to the income earned by the bottom 10% of the household income distribution, this paper finds that the implementation of the minimum wage may have a negative short-run effect on the mean level of household income earned by this part of the income distribution: When measuring the bite of the regulation via the Kaitz index, it appears that a one percentage point increase in the fraction of minimum wage to the regional mean wage decreases income earned by the lowest decile decreased by 0.29%

Based on the results as seen above, there appears to be no evidence that the minimum wage has a positive short-term effect on the family income earned by the bottom 50, 20, or 10 percent of the income distribution. Therefore, this paper does not find empirical support for the main rationale of the legislation: In the short term, no evidence implementing a minimum wage will lead to improvements in income distribution by raising low-income families out of poverty. These results are in line with the results found by Neumark et al. (2006), who, based on data from Brazil, found no evidence that minimum wages compress income inequality by raising those located at the lower points of the distribution. Thus, this study is unable to conclude that the minimum wage is a good redistribution tool, at least in the short term.