Wage Inequality, Minimum Wage Effects and Spillovers
AbstractThis paper investigates possible spillover effects of the UK minimum wage. The halt in the growth in inequality in the lower half of the wage distribution (as measured by the 50:10 percentile ratio) since the mid 1990s, in contrast to the continued inequality growth in the upper half of the distribution, suggests the possibility of a minimum wage effect and spillover effects on wages above the minimum. This paper analyses individual wage changes, using both a difference-in-differences estimator and a specification involving cross-uprating comparisons, and concludes that there have not been minimum wage spillovers. Since the UK minimum wage has always been below the 10th percentile, this lack of spillovers implies that minimum wage changes have not had an effect on the 50:10 percentile ratio measure of inequality in the lower half of the wage distribution. JEL classification: J31 ; J38 ; J08.
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Bibliographic InfoPaper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 965.
Date of creation: 2011
Date of revision:
Other versions of this item:
- Mark B. Stewart, 2012. "Wage inequality, minimum wage effects, and spillovers," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 616-634, October.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-HME-2011-06-18 (Heterodox Microeconomics)
- NEP-LAB-2011-06-18 (Labour Economics)
- NEP-LTV-2011-06-18 (Unemployment, Inequality & Poverty)
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- Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).
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