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Life on the Minimum Wage in Australia: An Empirical Investigation

Author

Listed:
  • Alfred Michael Dockery

    (Curtin University)

  • Richard Seymour

    (Curtin University)

  • Rachel Ong

    (Curtin University)

Abstract

From 2006 to 2009, Federal minimum wages in Australia were set by the Australian Fair Pay Commission. This paper uses data from the Household, Income and Labour Dynamics in Australia panel survey to investigate the circumstances of persons who are paid at or near the minimum wage, and thus potentially affected by the wage determinations. Net disposable incomes for actual and potential minimum wage workers are modelled in and out of work to investigate the implications of the wage determinations on work incentives. In addition, a range of measures of socioeconomic status and wellbeing are inspected. Comparisons are made with selected groups of non-employed persons and those with higher earnings to highlight the potential costs and benefits for affected individuals, and hence the potential trade-offs faced in setting minimum wages if we accept that increases in minimum wages reduce employment opportunities.

Suggested Citation

  • Alfred Michael Dockery & Richard Seymour & Rachel Ong, 2010. "Life on the Minimum Wage in Australia: An Empirical Investigation," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 13(1), pages 1-26.
    • Handle: RePEc:ozl:journl:v:13:y:2010:i:1:p:1-26
    as

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    References listed on IDEAS

    as
    1. Andrew Leigh, 2007. "Does Raising the Minimum Wage Help the Poor?," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 432-445, December.
    2. Tony Dalton & Rachel Ong, 2007. "Welfare to Work in Australia: Disability Income Support, Housing Affordability and Employment Incentives," European Journal of Housing Policy, Taylor and Francis Journals, vol. 7(3), pages 275-297.
    3. Paul Flatau & June Galea & Ray Petridis, 2000. "Mental Health and Wellbeing and Unemployment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(2), pages 161-181, June.
    4. Jahoda,Marie, 1982. "Employment and Unemployment," Cambridge Books, Cambridge University Press, number 9780521285865.
    5. 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.
    6. Bruce Headey & Mark Wooden, 2004. "The Effects of Wealth and Income on Subjective Well‐Being and Ill‐Being," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 24-33, September.
    7. Hielke Buddelmeyer & Sher Verick, 2008. "Understanding the Drivers of Poverty Dynamics in Australian Households," The Economic Record, The Economic Society of Australia, vol. 84(266), pages 310-321, September.
    8. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    9. Tullio Jappelli & Luigi Pistaferri, 2010. "Does Consumption Inequality Track Income Inequality in Italy?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 133-153, January.
    10. Liliana Winkelmann & Rainer Winkelmann, 1998. "Why Are the Unemployed So Unhappy?Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
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    Cited by:

    1. Rachel Ong & Gavin Wood & Melek Cigdem, 2013. "Work incentives and decisions to remain in paid work in Australia," Bankwest Curtin Economics Centre Working Paper series WP1312, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    2. Rachel Ong & Shrina Shah, 2012. "Job Security Satisfaction in Australia: Do Migrant Characteristics and Gender Matter," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 15(2), pages 123-139.

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    More about this item

    Keywords

    Labour Economics; Wages; Compensation; and Labour Costs; Public Policy;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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