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Living Wages in Portugal: in search of dignity in a highly polarized labour market

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  • José António Pereirinha
  • Elvira Pereira

Abstract

Living Wage (LW) is a concept that goes beyond that of National Minimum Wage (NMW), since it implies income adequacy to the wage earners and to his/her family members. The implementation of LW in Portugal then implies a mix of variables, including the minimum wage (that imply labour costs, and a change of earnings distribution), but also variables that imply fiscal costs (social benefits and tax deductions). It is then expected to reach household income adequacy, and to be feasible regarding the labour and fiscal costs, and socially acceptable regarding the change of earnings distribution. The relevance of such trade-offs is of high relevance for the Portuguese economy where average and median wages are low, the NMW is generous, when related to the median wage, and wage income distribution has high inequality, namely at the top, evidencing high polarization. This article analyses such issues centred on the worker (as a wage earner, as a household member and as a citizen with social rights and fiscal duties) and using EU-SILC data to quantify some of these trade-offs by the simulation of different values for core action variables aiming to reach LW, supported on an adequate normative estimation of a Minimum Income Standard (MIS) for Portugal.

Suggested Citation

  • José António Pereirinha & Elvira Pereira, 2021. "Living Wages in Portugal: in search of dignity in a highly polarized labour market," Working Papers GHES - Office of Economic and Social History 2021/74, ISEG - Lisbon School of Economics and Management, GHES - Social and Economic History Research Unit, Universidade de Lisboa.
    • Handle: RePEc:ise:gheswp:wp742021
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    References listed on IDEAS

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    More about this item

    Keywords

    Living Wage (LW); National Minimum Wage (NMW); Minimum Income Standard (MIS); adequacy; feasibility; acceptability JEL classification: D60; I30; J30;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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