Minimum Wages and Wage Inequality in the OECD Countries
This paper investigates the impact of the effective minimum wage, defined as the log difference between the minimum and the median wages, on wage inequalities in the OECD countries. Unlike the previous studies that focus on single countries in which the minimum wage has no cross-sectional variati...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Korea Institute for International Economic Policy
2020-09-01
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| Series: | East Asian Economic Review |
| Subjects: | |
| Online Access: | https://dx.doi.org/10.11644/KIEP.EAER.2020.24.3.379 |
| Summary: | This paper investigates the impact of the effective minimum wage, defined as the log
difference between the minimum and the median wages, on wage inequalities in the
OECD countries. Unlike the previous studies that focus on single countries in which
the minimum wage has no cross-sectional variation and rely instead on within-country
variations of wage distribution across regions or socio-economic characteristics, we
use a country panel that allows for both cross-sectional and time-series variations in
minimum wage. We also control for more factors than in the previous studies whose
absence may cause endogeneity. Our results confirm the previous findings that
increases in minimum wage alleviate the wage inequality at the lower tail of the wage
distribution, while having little effect at the upper tail. The estimated effect is larger
for women than for men, which is consistent with the fact that the share of workers
who are directly affected by the changes in minimum wage is bigger among women
than men. An application of the IVs of Autor, Manning and Smith (2016) supports the
robustness of our findings. |
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| ISSN: | 2508-1640 2508-1667 |