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Minimum wages: possible effects on the distribution of income

  • Amanda Gosling

    ()

    (Institute for Fiscal Studies and University of Essex)

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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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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  1. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
  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. repec:cup:cbooks:9780521367288 is not listed on IDEAS
  4. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October.
  5. Chris Trinder, 1995. "What about the Public Sector?," New Economy, Institute for Public Policy Research, vol. 2(4), pages 228-232, December.
  6. 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.
  7. 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.
  8. 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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