This paper estimates the pass-through of minimum wage increases into the prices of US grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking. The rise in prices occurs mostly through an increase in the frequency of price increases. Prices rise to the same extent for goods consumed by low-income and high-income households. Our results suggest that consumers rather than firms bear the cost of minimum wage increases in the retail sector.

The earnings difference between black and white workers fell dramatically in the United States in the late 1960s and early 1970s. This paper shows that the extension of the minimum wage played a critical role in this decline. The 1966 Fair Labor Standards Act extended federal minimum wage coverage to agriculture, restaurants, nursing homes, and other services which were previously uncovered and where nearly a third of black workers were employed. We digitize over 1,000 hourly wage distributions from Bureau of Labor Statistics industry wage reports and use CPS micro-data to investigate the effects of this reform on wages, employment, and racial inequality. Using a cross-industry difference- in-differences design, we show that wages rose sharply for workers in the newly covered industries. The impact was nearly twice as large for black workers as for white. Within treated industries, the racial gap adjusted for observables fell from 25 log points pre- reform to zero afterwards. Using a bunching design, we find no effect of the reform on employment. We can rule out significant dis-employment effects for black workers. The 1966 extension of the minimum wage can explain more than 20% of the reduction in the racial earnings and income gap during the Civil Rights Era. Our findings shed new light on the dynamics of labor market inequality in the United States and suggest that minimum wage policy can play a critical role in reducing racial economic disparities.

Carbon offsets allow greenhouse gas emitters to comply with an emissions cap by paying others outside of the capped sectors to reduce emissions. The first major carbon offset programme, the United Nations’ Clean Development Mechanism (CDM), has been criticized for generating a large number of credits from projects that do not actually reduce emissions. Following the controversial CDM experience, California pioneered a second-generation compliance offset programme that shifts the focus of quality control from assessments of individual projects to the development of offset protocols, which define project type-specific eligibility criteria and methods for estimating emissions reductions. We assess the ability of California’s ‘standardized approach’ to mitigate the risk of over-crediting greenhouse gas reductions by reviewing the development of two California offset protocols – Mine Methane Capture and Rice Cultivation. We examine the regulator’s treatment of three sources of over-crediting under the CDM: non-additional projects, inflated counterfactual baseline scenarios, and perverse incentives that inadvertently increase emissions. We find that the standardized approach offers the ability to reduce, but not eliminate, the risk of over-crediting. This requires careful protocol-scale analysis, conservative methods for estimating reductions, ongoing monitoring of programme outcomes, and restricting participation to project types with manageable levels of uncertainty in emission reductions. However, several of these elements are missing from California’s regime, and even best practices result in significant uncertainty in true emission reductions. Relying on carbon offsets to lower compliance costs risks lessening total emission reductions and increases uncertainty in whether an emissions target has been met.

Key policy insights

- Substantial and ongoing oversight by offset programme administrators is needed to contain uncertainty and avoid over-crediting.

- California’s Mine Methane Capture Protocol may have influenced federal decisions not to regulate methane emissions from coal mines on federally-owned lands.

- Government priorities and methodological choices drive outcomes in carbon pricing policies with large offset programmes, contrary to the common perception that these policies delegate decision-making to private actors.

- Offsets are better understood as a way for regulated emitters to invest in an incentive programme that achieves difficult-to-estimate emission reductions, than as accurately quantified tons of reductions.

In-work credits grew in popularity worldwide during the late 1990s and 2000s as a means of reforming welfare systems in ways that could both encourage work and reduce poverty. This paper reviews the role of in-work tax credits in theUKand theUS, what is known and remains to be known about their impacts and distributional consequences, and the possibilities for reform. Evidence is clear that in-work credits reduce poverty and can encourage lone parents to work, but have minimal impacts, in aggregate, on second earners. Spending on in-work credits has grown in the UK, but there have been two major overhauls of the way these are structured so that, on current plans, the UK will not have an identifiable in-work credit by 2023. In the US, in-work assistance has grown in generosity and reach since the 1980s, thanks to broad political support for the Earned Income Tax Credit (EITC) and the (less-targeted) Child Tax Credit. Future debates in the UK should focus on the rise of in-work poverty, particularly amongst couples, with some needed focus on the design of in-work benefits, a debate here economic analysis and evidence should have a major role to play. In the US, the policy discussion should be aboutIn-work credits grew in popularity worldwide during the late 1990s and 2000s as a means of reforming welfare systems in ways that could both encourage work and reduce poverty. This paper reviews the role of in-work tax credits in the UK and theUS, what is known and remains to be known about their impacts.
and distributional consequences, and the possibilities for reform. Evidence is
clear that in-work credits reduce poverty and can encourage lone parents to
work, but have minimal impacts, in aggregate, on second earners. Spending on
in-work credits has grown in the UK, but there have been two major overhauls
of the way these are structured so that, on current plans, the UK will not
have an identifiable in-work credit by 2023. In the US, in-work assistance
has grown in generosity and reach since the 1980s, thanks to broad political
support for the Earned Income Tax Credit (EITC) and the (less-targeted) Child
Tax Credit. Future debates in the UK should focus on the rise of in-work
poverty, particularly amongst couples, with some needed focus on the design
of in-work benefits, a debate where economic analysis and evidence should
have a major role to play. In the US, the policy discussion should be about whether to increase substantially the EITC for those without children, and how
best to maintain or expand the credit’s generosity for those with children.

The Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) is one of the most important elements of the social safety net. Unlike most other safety net programs, SNAP varies little across states and over time, which creates challenges for quasi-experimental evaluation. Notably, SNAP benefits are fixed across 48 states; but local food prices vary, leading to geographic variation in the real value – or purchasing power – of SNAP benefits. In this study, we provide the first estimates that leverage variation in SNAP purchasing power across markets to examine effects of SNAP on child health. We link panel data on regional food prices to National Health Interview Survey data and use a fixed effects framework to estimate the relationship between local purchasing power of SNAP and children’s health and health care utilization. We find that lower SNAP purchasing power leads to lower utilization of preventive health care and more days of school missed due to illness. We estimate no effect on parent-reported health status.