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Minimum wage and tolerance for inequality

Author

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  • Andrea Fazio

    (University of Pavia, Pavia, Italy)

  • Tommaso Reggiani

    (Cardiff University, Cardiff, UK; Masaryk University, Brno, Czech Republic)

Abstract

We suggest that people advocate for equality also because they fear income losses below a given reference point. Stabilizing their baseline income can make workers more tolerant of inequality. We present evidence of this attitude in the UK by exploiting the introduction of the National Minimum Wage (NMW), which institutionally set a baseline pay reducing the risk of income losses for British workers at the bottom of the income distribution. Based on data from the British Household Panel Survey, we show that workers that benefited from the NMW program became relatively more tolerant of inequality and more likely to vote for the Conservative party.

Suggested Citation

  • Andrea Fazio & Tommaso Reggiani, 2022. "Minimum wage and tolerance for inequality," MUNI ECON Working Papers 2022-07, Masaryk University, revised Feb 2023.
    • Handle: RePEc:mub:wpaper:2022-07
    DOI: 10.5817/WP_MUNI_ECON_2022-07
    Note: License: CC BY-NC-ND 4.0
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    More about this item

    Keywords

    Inequality; Redistribution; Minimum wage; Reference dependency; United Kingdom.;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • Z1 - Other Special Topics - - Cultural Economics

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