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Tackling labour market inequalities through minimum and maximum wages

Author

Listed:
  • Guilherme Spinato Morlin
  • Marco Stamegna
  • David Cano Ortiz
  • Simone D'Alessandro
  • Pietro Guarnieri

Abstract

The effectiveness of statutory minimum wages in reducing income inequality and alleviating working poverty is widely recognized in labour market policy discussions. Less attention has been paid to the potential of salary caps to further reduce wage disparities by targeting the top of the income distribution. In this paper, we simulate the introduction of statutory minimum and maximum wages in Italy using Eurogreen, a dynamic macro-simulation model that combines input output analysis with labour market heterogeneity. Our findings indicate that the joint implementation of the two policies can substantially reduce labour market inequalities across gender, skill levels, occupational categories, and industrial sectors, without negatively affecting the overall performance of the economy.

Suggested Citation

  • Guilherme Spinato Morlin & Marco Stamegna & David Cano Ortiz & Simone D'Alessandro & Pietro Guarnieri, 2024. "Tackling labour market inequalities through minimum and maximum wages," Discussion Papers 2024/320, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2024/320
    Note: ISSN 2039-1854
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    File URL: https://www.ec.unipi.it/documents/Ricerca/papers/2024-320.pdf
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    More about this item

    Keywords

    Labour-market policy; Industry heterogeneity; gender gap; Dynamic Macrosimulation;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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