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Minimum wages and the wage distribution in Estonia

Author

Listed:
  • Simona Ferraro
  • Jaanika Merikull

    ()

  • Karsten Staehr

Abstract

This paper analyses how the statutory minimum wage has affected the wage distribution in Estonia, a country with virtually little collective bargaining and relatively large wage inequality. The computations follow Lee (1999) but the effects of the minimum wage are identified by the degree to which the minimum wage binds in different labour markets defined by time, region and sector. The minimum wage affects wages in the lower tail of the distribution, but the effects are most pronounced up to the 20th percentile and then decline markedly as the wage approaches the median wage. The minimum wage is of greater importance for women than for men. Interestingly, the importance of the minimum wage for the lower tail of the wage distribution was smaller during the global financial crisis than before or after the crisis.

Suggested Citation

  • Simona Ferraro & Jaanika Merikull & Karsten Staehr, 2016. "Minimum wages and the wage distribution in Estonia," Bank of Estonia Working Papers wp2016-6, Bank of Estonia, revised 19 Aug 2016.
  • Handle: RePEc:eea:boewps:wp2016-6
    as

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    File URL: http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2016/wp06_2016.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    inflation ex-post uncertainty; monetary policy; country effects; inflation forecasting;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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