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The impact of a minimum wage change on the distribution of wages and household income

Author

Listed:
  • Paul Redmond
  • Karina Doorley
  • Seamus McGuinness

Abstract

We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately 8 and 4%, respectively. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.

Suggested Citation

  • 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.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:3:p:1034-1056.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaa048
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    Cited by:

    1. Redmond, Paul & Ma tre, Bertrand & McGuinness, Seamus & Maragkou, Konstantina, 2021. "A comparative assessment of minimum wage employment in Europe," Research Series, Economic and Social Research Institute (ESRI), number RS123.
    2. Filauro Stefano & Grünberger Klaus & Narazani Edlira, 2025. "Coordinated Minimum Wage Policies: Impacts on EU-Level Income Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(2), pages 209-246.
    3. 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.
    4. Roantree, Barra & Barrett, Michelle & Redmond, Paul, 2022. "Poverty, income inequality and living standards in Ireland: 2nd annual report," Research Series, Economic and Social Research Institute (ESRI), number JR1.
    5. 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.
    6. Redmond, Paul, 2020. "Minimum wage policy in Ireland," Papers BP2021/2, Economic and Social Research Institute (ESRI).
    7. Doorley, Karina & Privalko, Ivan & Russell, Helen & Tuda, Dora, 2021. "The Gender Pay Gap in Ireland from Austerity through Recovery," IZA Discussion Papers 14441, Institute of Labor Economics (IZA).
    8. Roantree, Barra & Doorley, Karina, 2023. "Poverty, income inequality and living standards in Ireland: Third annual report," Research Series, Economic and Social Research Institute (ESRI), number JR4.
    9. Artur Sikora, 2021. "The minimum wage in Poland and its connection to unemployment: Evaluating causality," Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie / The Malopolska School of Economics in Tarnow Research Papers Collection, Malopolska School of Economics in Tarnow, vol. 50(2), pages 65-77, June.
    10. Keane, Claire & O'Malley, Seamus & Tuda, Dora, 2021. "The Distributional Impact of Pension Auto-enrolment," Papers WP707, Economic and Social Research Institute (ESRI).
    11. Robayo, Monica & Zamfir,Madalina & Wronski,Marcin, 2024. "Simulating Aggregate and Distributional Effects of Minimum Wage Increases in Romania : Evidence from Survey and Administrative Tax Data," Policy Research Working Paper Series 10934, The World Bank.
    12. Lestari Agusalim & Hermanto Siregar & Lukytawati Anggraeni & Sri Mulatsih, 2025. "The Heterogeneous Effects of a Minimum Wage Policy on Hours Worked and Real Wages in Indonesia," Economic Research Guardian, Mutascu Publishing, vol. 15(1), pages 88-115, June.

    More about this item

    JEL classification:

    • 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
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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