IDEAS home Printed from https://ideas.repec.org/a/kap/decono/v173y2025i2d10.1007_s10645-025-09451-z.html
   My bibliography  Save this article

The Effects of Dutch Youth Minimum Wage Increases on Income Inequality

Author

Listed:
  • Koen Steenks

    (Vrije Universiteit Amsterdam)

  • Arjan Heyma

    (SEO Amsterdam Economics)

  • Tobias Vervliet

    (SEO Amsterdam Economics)

Abstract

This study employs increases in the Dutch Youth Minimum Wage (YMW) in 2017 and 2019 for certain age groups as a natural experiment to examine the impact of changes in minimum wages on income inequality through the employment-channel. Using the Difference-in-Difference (DiD) and Two-Stage Least Squares (2SLS) methods, it estimates the effects of YMW increases on hourly wages and working hours across various income segments. These effects are then used to simulate the monthly income distribution after the YMW increases in 2017 and 2019. This way, a comparative analysis is conducted between the observed income distribution prior to the YMW increases and the simulated income distribution thereafter, focusing on the aspect of income inequality. The findings reveal distinct effects based on the magnitude of the wage increase. Modest increases (for individuals aged 18–19) and substantial increases (for individuals aged 20–22 in 2017 and 20–21 in 2019) both generate spike and spillover effects, influencing individuals earning hourly wages up to at least 120% of the new minimum wage. Small increases reduce working hours for higher-income individuals, while larger increases negatively affect working hours for middle-income earners (100–150% of the new YMW) but benefit those earning below 100% and above 150% of the new threshold. Overall, both small and large YMW increases contribute to income redistribution by altering wages and working hours.

Suggested Citation

  • Koen Steenks & Arjan Heyma & Tobias Vervliet, 2025. "The Effects of Dutch Youth Minimum Wage Increases on Income Inequality," De Economist, Springer, vol. 173(2), pages 299-330, July.
    • Handle: RePEc:kap:decono:v:173:y:2025:i:2:d:10.1007_s10645-025-09451-z
    DOI: 10.1007/s10645-025-09451-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10645-025-09451-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10645-025-09451-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    2. repec:fth:prinin:315 is not listed on IDEAS
    3. Congressional Budget Office, 2019. "The Effects on Employment and Family Income of Increasing the Federal Minimum Wage," Reports 55410, Congressional Budget Office.
    4. Claus Thustrup Kreiner & Daniel Reck & Peer Ebbesen Skov, 2020. "Do Lower Minimum Wages for Young Workers Raise Their Employment? Evidence from a Danish Discontinuity," The Review of Economics and Statistics, MIT Press, vol. 102(2), pages 339-354, May.
    5. Oosterbeek, Hessel & ter Meulen, Simon & van der Klaauw, Bas, 2021. "Long-term effects of school-starting-age rules," Economics of Education Review, Elsevier, vol. 84(C).
    6. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    7. Hyslop, Dean & Stillman, Steven, 2007. "Youth minimum wage reform and the labour market in New Zealand," Labour Economics, Elsevier, vol. 14(2), pages 201-230, April.
    8. Caliendo Marco & Wittbrodt Linda & Schröder Carsten, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany – An Overview," German Economic Review, De Gruyter, vol. 20(3), pages 257-292, August.
    9. Jeffrey Clemens & Michael R. Strain, 2021. "The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-Analysis Plan," NBER Working Papers 29264, National Bureau of Economic Research, Inc.
    10. Seamus McGuinness & Paul Redmond, 2019. "The Impact of a Minimum‐Wage Increase on Temporary‐Contract Workers," Fiscal Studies, John Wiley & Sons, vol. 40(2), pages 149-173, June.
    11. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290, National Bureau of Economic Research, Inc.
    12. Claire Crawford & Lorraine Dearden & Ellen Greaves, 2013. "The impact of age within academic year on adult outcomes," DoQSS Working Papers 13-05, Quantitative Social Science - UCL Social Research Institute, University College London.
    13. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    14. Emiel van Bezooijen & Wiljan van den Berge & Anna Salomons, 2024. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 77(3), pages 428-460, May.
    15. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    16. Riley, Rebecca & Rosazza Bondibene, Chiara, 2017. "Raising the standard: Minimum wages and firm productivity," Labour Economics, Elsevier, vol. 44(C), pages 27-50.
    17. Hindriks, Jean & Myles, Gareth D., 2013. "Intermediate Public Economics," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262018691, December.
    18. 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..
    19. Paul Redmond & Karina Doorley & Seamus McGuinness, 2021. "The impact of a minimum wage change on the distribution of wages and household income," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1034-1056.
    20. Neumark, David & Wascher, William L., 2007. "Minimum Wages and Employment," Foundations and Trends(R) in Microeconomics, now publishers, vol. 3(1–2), pages 1-182, March.
    21. Christian Dustmann & Patrick A. Puhani & Uta Schönberg, 2017. "The Long‐term Effects of Early Track Choice," Economic Journal, Royal Economic Society, vol. 127(603), pages 1348-1380, August.
    22. Hristos Doucouliagos & T. D. Stanley, 2009. "Publication Selection Bias in Minimum‐Wage Research? A Meta‐Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 406-428, June.
    23. Redmond, Paul & Doorley, Karina & McGuinness, Seamus, 2021. "The impact of a minimum wage change on wages and household income," Papers RB202104, Economic and Social Research Institute (ESRI).
    24. Simone Balestra & Beatrix Eugster & Helge Liebert, 2020. "Summer‐born struggle: The effect of school starting age on health, education, and work," Health Economics, John Wiley & Sons, Ltd., vol. 29(5), pages 591-607, May.
    25. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626, November.
    26. Christian Dustmann & Patrick A. Puhani & Uta Schönberg, 2017. "The Long‐term Effects of Early Track Choice," Economic Journal, Royal Economic Society, vol. 127(603), pages 1348-1380, August.
    27. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    28. Wiljan van den Berge, 2021. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," CPB Discussion Paper 422.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    29. Gregory, Terry & Zierahn, Ulrich, 2022. "When the minimum wage really bites hard: The negative spillover effect on high-skilled workers," Journal of Public Economics, Elsevier, vol. 206(C).
    30. David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    31. Engelhardt, Gary V. & Purcell, Patrick J., 2021. "The minimum wage and annual earnings inequality," Economics Letters, Elsevier, vol. 207(C).
    32. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-649, May.
    33. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arindrajit Dube & Attila Lindner, 2024. "Minimum Wages in the 21st Century," RFBerlin Discussion Paper Series 2425, Rockwool Foundation Berlin (RF Berlin).
    2. Garcia-Louzao, Jose & Tarasonis, Linas, 2023. "Wage and Employment Impact of Minimum Wage: Evidence from Lithuania," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 592-609.
    3. Redmond, Paul & Kelly, Lorcan & Staffa, Elisa, 2025. "A study of minimum wage employment in Ireland using online job vacancy data," Research Series, Economic and Social Research Institute (ESRI), number RS209, July.
    4. Jeffrey Clemens & Michael R. Strain, 2023. "How important are minimum wage increases in increasing the wages of minimum wage workers?," Contemporary Economic Policy, Western Economic Association International, vol. 41(4), pages 594-612, October.
    5. Bachmann, Ronald & Boockmann, Bernhard & Gonschor, Myrielle & Kalweit, René & Klauser, Roman & Laub, Natalie & Rulff, Christian & Vonnahme, Christina, 2022. "Auswirkungen des gesetzlichen Mindestlohns auf Löhne und Arbeitszeiten," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 264288.
    6. Bachmann, Ronald & Bonin, Holger & Boockmann, Bernhard & Demir, Gökay & Felder, Rahel & Isphording, Ingo & Kalweit, René & Laub, Natalie & Vonnahme, Christina & Zimpelmann, Christian, 2020. "Auswirkungen des gesetzlichen Mindestlohns auf Löhne und Arbeitszeiten: Studie im Auftrag der Mindestlohnkommission," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 222998.
    7. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2024. "Long-term responses to large minimum wage shocks: Subminimum and super-minimum workers in Slovenia," Economic Systems, Elsevier, vol. 48(4).
    8. Link, Sebastian, 2024. "The price and employment response of firms to the introduction of minimum wages," Journal of Public Economics, Elsevier, vol. 239(C).
    9. Gregory, Terry & Zierahn, Ulrich, 2022. "When the minimum wage really bites hard: The negative spillover effect on high-skilled workers," Journal of Public Economics, Elsevier, vol. 206(C).
    10. Paul Redmond & Seamus McGuinness, 2025. "The impact of a minimum wage increase on hours worked: heterogeneous effects by gender and sector," Economica, London School of Economics and Political Science, vol. 92(365), pages 84-106, January.
    11. Pestel, Nico & Bonin, Holger & Isphording, Ingo E. & Gregory, Terry & Caliendo, Marco, 2020. "Auswirkungen des gesetzlichen Mindestlohns auf Beschäftigung und Arbeitslosigkeit," IZA Research Reports 95, Institute of Labor Economics (IZA).
    12. Fidrmuc, Jan & Tena, J. D., 2018. "UK national minimum wage and labor market outcomes of young workers," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-28.
    13. Lei Xu & Yu Zhu, 2023. "Does the employment effect of national minimum wage vary by non‐employment rate? A regression discontinuity approach," Manchester School, University of Manchester, vol. 91(1), pages 18-36, January.
    14. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2023. "The short- and medium-term distributional effects of the German minimum wage reform," Empirical Economics, Springer, vol. 64(3), pages 1149-1175, March.
    15. David Neumark, 2017. "The Employment Effects of Minimum Wages: Some Questions We Need to Answer," NBER Working Papers 23584, National Bureau of Economic Research, Inc.
    16. Emiel van Bezooijen & Wiljan van den Berge & Anna Salomons, 2024. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 77(3), pages 428-460, May.
    17. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    18. Duanmu, Jing-Lin & Norbäck, Pehr-Johan & Lu, Jane Wenzhen & Clegg, Jeremy, 2022. "Contraction under minimum wages? Operational and financial advantages of multinational subsidiaries in China," International Business Review, Elsevier, vol. 31(2).
    19. Redmond, Paul & McGuinness, Seamus, 2022. "Heterogeneous effects of a minimum wage increase on hours worked," Research Series, Economic and Social Research Institute (ESRI), number RS132, July.
    20. Dale Belman & Paul Wolfson & Kritkorn Nawakitphaitoon, 2015. "Who Is Affected by the Minimum Wage?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 582-621, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:decono:v:173:y:2025:i:2:d:10.1007_s10645-025-09451-z. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.