Divergent Paths: Differential Impacts of Minimum-Wage Increases on Individuals with Disabilities

We analyze the differential effects of minimum-wage increases on individuals with disabilities using data from the American Community Survey and leveraging state-level minimum-wage variation during the 2010s. Using a novel disability severity prediction method, we find that large minimum-wage increases significantly reduce employment and labor-force participation for individuals of all working ages with severe disabilities. These declines are accompanied by a downward shift in the earnings distribution and an increase in public assistance receipt. By contrast, we find no employment effects for all but young individuals with either nonsevere disabilities or no disabilities. Our findings highlight important heterogeneities in minimum-wage impacts, raising concerns about labor-market policies’ unintended consequences for populations on the margins of the labor force.