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Minimum wages: possible effects on the distribution of income

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  • Amanda Gosling

    ()
    (Institute for Fiscal Studies and University of Essex)

Abstract

Since the 1980s, there has been increased interest among unions and two opposition parties in the possibility of introducing a national minimum wage (NMW). The central argument for a minimum wage is a social justice one: a minimum wage is deemed necessary to prevent some employers exploiting workers with little bargaining power by paying them less than the value of the goods and services they produce. The aim of this paper is to establish what sort of people might be affected by a minimum wage, how this might have changed over time and how far a minimum wage can be used as a tool to redistribute income from the rich to the poor. No attempt is made to simulate the effect of a NMW on employment and prices, and obviously any complete analysis needs to take these effects into account. Recent research (see the discussion below) on this issue, however, indicates little evidence that a `moderate\\\' minimum will have any effect on employment and it is thus likely that the ‘first-round effects\\\' described in this paper are informative.

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Bibliographic Info

Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 17 (1996)
Issue (Month): 4 (November)
Pages: 31-48

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Handle: RePEc:ifs:fistud:v:17:y:1996:i:4:p:31-48

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References

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  1. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
  2. Susan Harkness, 1996. "The gender earnings gap: evidence from the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 17(2), pages 1-36, May.
  3. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
  4. Polachek,Solomon W. & Siebert,W. Stanley, 1993. "The Economics of Earnings," Cambridge Books, Cambridge University Press, number 9780521367288, October.
  5. Stephen Machin & Alan Manning, 1994. "The effects of minimum wages on wage dispersion and employment: Evidence from the U.K. Wages Councils," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(2), pages 319-329, January.
  6. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October.
  7. Richard Dickens & Alan Manning, 1995. "After Wages Councils," New Economy, Institute for Public Policy Research, vol. 2(4), pages 223-227, December.
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Citations

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Cited by:
  1. Kapelyuk Sergey, 2014. "Impact of minimum wage on income distribution and poverty in Russia," EERC Working Paper Series 14/03e, EERC Research Network, Russia and CIS.
  2. Müller, Kai-Uwe & Steiner, Viktor, 2008. "Would a Legal Minimum Wage Reduce Poverty? A Microsimulation Study for Germany," IZA Discussion Papers 3491, Institute for the Study of Labor (IZA).
  3. Stefano Scarpetta, 1998. "Labor Market Reforms and Unemployment: Lessons from the Experience of the OECD Countries," Research Department Publications 4136, Inter-American Development Bank, Research Department.
  4. Kai-Uwe Müller & Viktor Steiner, 2013. "Distributional Effects of a Minimum Wage in a Welfare State: The Case of Germany," SOEPpapers on Multidisciplinary Panel Data Research 617, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Müller, Kai-Uwe & Steiner, Viktor, 2010. "Labor Market and Income Effects of a Legal Minimum Wage in Germany," IZA Discussion Papers 4929, Institute for the Study of Labor (IZA).
  6. David Metcalf, 1999. "The British National Minimum Wage," CEP Discussion Papers dp0419, Centre for Economic Performance, LSE.
  7. Kai-Uwe Müller & Viktor Steiner, 2008. "Would a Legal Minimum Wage Reduce Poverty?: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 791, DIW Berlin, German Institute for Economic Research.
  8. David Metcalf, 1999. "The British national minimum wage," LSE Research Online Documents on Economics 20229, London School of Economics and Political Science, LSE Library.
  9. Sutherland, H., 2001. "The National Minimum Wage and In-work Poverty," Cambridge Working Papers in Economics 0111, Faculty of Economics, University of Cambridge.
  10. Stefano Scarpetta, 1998. "Reformas laborales de mercado y desempleo: enseñanzas de la experiencia de los países de la OCDE," Research Department Publications 4137, Inter-American Development Bank, Research Department.
  11. Pio Baake & Vanessa von Schlippenbach, 2008. "Upfront Payments and Listing Decisions," Discussion Papers of DIW Berlin 793, DIW Berlin, German Institute for Economic Research.
  12. Holly Sutherland, 1997. "Women, men and the redistribution of Income," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 1-22, February.

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