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The Impact of the Regulation of Low Wages on Inequality and Labour-Market Adjustment: A Comparative Analysis

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  • Bazen, Stephen

Abstract

In all continental European countries there exist non-market mechanisms that determine or "regulate" wage rates for the low-paid. We consider the experience of three countries that have national minimum wages France, Belgium, and the Netherlands--and three where low wage rates are determined through widespread collective bargaining--Germany, Italy, and Denmark. We find that overall there is less inequality (both wage and income) and less poverty than in the United Kingdom and the United States, where low wages are less regulated. Furthermore, patterns of labour-market adjustment--employment, unemployment, and gross job flows--vary greatly, suggesting that there is no one-to-one mapping between the presence of mechanisms to regulate low wages and labour-market performance. Furthermore, wage shares have been falling since the early 1980s. It is therefore difficult to attribute high and persistent rates of unemployment found in certain countries to the existence of mechanisms to "regulate" low wages. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Bazen, Stephen, 2000. "The Impact of the Regulation of Low Wages on Inequality and Labour-Market Adjustment: A Comparative Analysis," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(1), pages 57-69, Spring.
    • Handle: RePEc:oup:oxford:v:16:y:2000:i:1:p:57-69
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    Cited by:

    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. Grimshaw, Damian., 2011. "What do we know about low wage work and low wage workers? : Analysing the definitions, patterns, causes and consequences in international perspective," ILO Working Papers 994648583402676, International Labour Organization.
    3. Rubery, Jill., 2003. "Pay equity, minimum wage and equality at work," ILO Working Papers 993668723402676, International Labour Organization.
    4. Fitriya & Abdul Basyith & Rabin Ibnu Zainal, 2020. "The Doubled-Edge Sword of Raising the Minimum Wage: The Case of Indonesia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1453-1465, December.
    5. W. S. Siebert, 2005. "Labour Market Regulation: Some Comparative Lessons," Economic Affairs, Wiley Blackwell, vol. 25(3), pages 3-10, September.
    6. Skedinger, Per, 2007. "The Design and Effects of Collectively Agreed Minimum Wages: Evidence from Sweden," Working Paper Series 700, Research Institute of Industrial Economics.
    7. Cuong Viet Nguyen, 2013. "The impact of minimum wages on employment of low-wage workers," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(3), pages 583-615, July.
    8. Fitriya & Abdul Basyith & Rabin Ibnu Zainal, 2020. "The Doubled-Edge Sword of Raising the Minimum Wage: The Case of Indonesia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1453-1465.
    9. Tomas Kucera, 2020. "Are Employment Effects of Minimum Wage the Same Across the EU? A Meta-Regression Analysis," Working Papers IES 2020/2, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2020.
    10. Cuong Viet Nguyen, 2017. "Do minimum wages affect firms’ labor and capital? Evidence from Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(2), pages 291-308, April.
    11. repec:ilo:ilowps:366872 is not listed on IDEAS
    12. Per Skedinger, 2010. "Sweden: A Minimum Wage Model in Need of Modification," Chapters, in: Daniel Vaughan-Whitehead (ed.), The Minimum Wage Revisited in the Enlarged EU, chapter 12, Edward Elgar Publishing.
    13. Kenworthy, Lane, 2002. "Do affluent countries face an income-jobs tradeoff?," MPIfG Discussion Paper 01/10, Max Planck Institute for the Study of Societies.
    14. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté [Morocco minimum wage employment and poverty]," MPRA Paper 38491, University Library of Munich, Germany.
    15. 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.

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