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Minimum Wage: Does it Improve Welfare in Thailand?

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  • Ximena V. del Carpio
  • Julián Messina
  • Anna Sanz‐de‐Galdeano

Abstract

We study the causal impact of the minimum wage on labor market outcomes, household consumption, inequality and poverty in Thailand by relying on policy variation in minimum wages over time across provinces. We find that minimum‐wage increases have a large and significant impact on the likelihood of working in the uncovered sector among workers with elementary education. However, the impact is very small and insignificant among other labor market groups. In contrast, the minimum wage has large positive effects on the formal sector wages of low‐earning workers, such as the young, elderly and low educated. Increases in the minimum wage are associated with reductions in household poverty and consumption inequality at the bottom half of the distribution.

Suggested Citation

  • Ximena V. del Carpio & Julián Messina & Anna Sanz‐de‐Galdeano, 2019. "Minimum Wage: Does it Improve Welfare in Thailand?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(2), pages 358-382, June.
    • Handle: RePEc:bla:revinw:v:65:y:2019:i:2:p:358-382
    DOI: 10.1111/roiw.12360
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    7. Del Carpio, Ximena & Nguyen, Ha & Wang, Liang Choon, 2012. "Does the minimum wage affect employment ? evidence from the manufacturing sector in Indonesia," Policy Research Working Paper Series 6147, The World Bank.
    8. Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 1-22, January.
    9. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.
    10. Wendy Cunningham, 2007. "Minimum Wages and Social Policy : Lessons from Developing Countries," World Bank Publications - Books, The World Bank Group, number 6760, December.
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    Citations

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    Cited by:

    1. Wiggins, Steve & Keats, Sharada, 2015. "Rural Wages in Asia," 2015 Conference, August 9-14, 2015, Milan, Italy 212615, International Association of Agricultural Economists.
    2. Robayo,Monica & Terskaya,Anastasia & Koettl-Brodmann,Stefanie, 2020. "Ex-ante Evaluation of the Impact of Increases in Minimum Wages on Labor Market Outcomes in Kosovo," Policy Research Working Paper Series 9357, The World Bank.
    3. Kenn Ariga, 2016. "Minimum wage through the looking glass," KIER Working Papers 927, Kyoto University, Institute of Economic Research.
    4. Wannaphong Durongkaveroj, 2017. "Minimum Wage and Lives of the Poor: Evidence from Thailand," PIER Discussion Papers 76, Puey Ungphakorn Institute for Economic Research.
    5. David Neumark & Luis Felipe Munguia Corella, 2019. "Do Minimum Wages Reduce Employment in Developing Countries? A Survey and Exploration of Conflicting Evidence," NBER Working Papers 26462, National Bureau of Economic Research, Inc.
    6. Neumark, David & Munguía Corella, Luis Felipe, 2021. "Do minimum wages reduce employment in developing countries? A survey and exploration of conflicting evidence," World Development, Elsevier, vol. 137(C).
    7. Mr. Christopher S Adam & Mr. Edward F Buffie, 2020. "The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence," IMF Working Papers 2020/023, International Monetary Fund.
    8. Zhao, Yueyang & Mao, Jinzhou, 2022. "Energy effects of non-energy policies: Minimum wage standard and enterprise energy efficiency in China," Resources Policy, Elsevier, vol. 79(C).
    9. Stijn Broecke & Alessia Forti & Marieke Vandeweyer, 2017. "The effect of minimum wages on employment in emerging economies: a survey and meta-analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 45(3), pages 366-391, July.
    10. Raymundo M. Campos-Vazquez & Gerardo Esquivel, 2023. "The Effect of the Minimum Wage on Poverty: Evidence from a Quasi-Experiment in Mexico," Journal of Development Studies, Taylor & Francis Journals, vol. 59(3), pages 360-380, March.
    11. Işık Enes & Orhangazi Özgür & Tekgüç Hasan, 2020. "Heterogeneous effects of minimum wage on labor market outcomes: A case study from Turkey," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-41, March.
    12. Nidhiya Menon & Yana van der Meulen Rodgers, 2017. "The Impact of the Minimum Wage on Male and Female Employment and Earnings in India," Asian Development Review, MIT Press, vol. 34(1), pages 28-64, March.
    13. Wannaphong Durongkaveroj, 2022. "Does the minimum wage improve the welfare of workers? Evidence from the 2013 minimum wage reform in Thailand," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 52-70, November.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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