Advanced Search
MyIDEAS: Login

Mind the Gap: Net Incomes of Minimum Wage Workers in the EU and the US

Contents:

Author Info

  • Marx, Ive

    ()
    (University of Antwerp)

  • Marchal, Sarah

    ()
    (University of Antwerp)

  • Nolan, Brian

    ()
    (University College Dublin)

Abstract

This paper focuses on the role of minimum wages, tax and benefit policies in protecting workers against financial poverty, covering 21 European countries with a national minimum wage and three US States (New Jersey, Nebraska and Texas). It is shown that only for single persons and only in a number of countries, net income packages at minimum wage level reach or exceed the EU's at-risk-of poverty threshold, set at 60 per cent of median equivalent household income in each country. For lone parents and sole breadwinners with a partner and children to support, net income packages at minimum wage are below this threshold almost everywhere, usually by a wide margin. This is the case despite shifts over the past decade towards tax relief and additional income support provisions for low-paid workers. We argue that there appear to be limits to what minimum wage policies alone can achieve in the fight against in-work poverty. The route of raising minimum wages to eliminate poverty among workers solely reliant on it seems to be inherently constrained, especially in countries where the distance between minimum and average wage levels is already comparatively small and where relative poverty thresholds are mostly a function of the dual-earner living standards. In order to fight in-work poverty new policy routes need to be explored. The paper offers a brief discussion of possible alternatives and cautions against 'one size fits all' policy solutions.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp6510.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6510.

as in new window
Length: 27 pages
Date of creation: Apr 2012
Date of revision:
Publication status: published in Marx, I. and K. Nelson (eds.), Minimum Income Protection in Flux, Palgrave MacMillan, 2012, pp. 54-80
Handle: RePEc:iza:izadps:dp6510

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: social transfers; minimum wage; poverty; taxes; subsidies;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Juan J. Dolado & Florentino Felgueroso & Juan F. Jimeno, 2000. "The Role of the Minimum Wage in the Welfare State: An Appraisal," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(III), pages 223-245, September.
  2. Denis Anne & Yannick L’Horty, 2009. "Les effets du revenu de Solidarité active sur les gains du retour à l'emploi," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 767-776.
  3. Bargain, Olivier & Orsini, Kristian, 2006. "Beans for breakfast? How exportable is the British workfare model?," EUROMOD Working Papers EM2/06, EUROMOD at the Institute for Social and Economic Research.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Marx, Ive & Nolan, Brian & Olivera, Javier, 2014. "The Welfare State and Anti-Poverty Policy in Rich Countries," IZA Discussion Papers 8154, Institute for the Study of Labor (IZA).
  2. Mueller, Kai-Uwe & Steiner, Viktor, 2013. "Behavioral effects of a federal minimum wage and income inequality in Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79784, Verein für Socialpolitik / German Economic Association.
  3. Mechelen, N. (Natascha) van & Bradshaw, J. (Jonathan), 2012. "GINI DP 50: Child Poverty as a Government Priority: Child Benefit Packages for Working Families, 1992-2009," GINI Discussion Papers 50, AIAS, Amsterdam Institute for Advanced Labour Studies.
  4. Bea Cantillon & Natascha Van Mechelen & Olivier Pintelon & Aaron Van den Heede, 2012. "Household Work Intensity and the Adequacy of Social Protection in the EU," Working Papers 1204, Herman Deleeck Centre for Social Policy, University of Antwerp.
  5. Mechelen, N. (Natascha) van & Sarah Marchal, 2012. "GINI DP 55: Struggle for Life: Social Assistance Benefits, 1992-2009," GINI Discussion Papers 55, AIAS, Amsterdam Institute for Advanced Labour Studies.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6510. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.