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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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    References listed on IDEAS

    as
    1. Kevin Pineda‐Hernández & François Rycx & Mélanie Volral, 2022. "How collective bargaining shapes poverty: New evidence for developed countries," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 895-928, December.
    2. Jeffrey Clemens, 2021. "How Do Firms Respond to Minimum Wage Increases? Understanding the Relevance of Non-employment Margins," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 51-72, Winter.
    3. Mario Bossler & Thorsten Schank, 2023. "Wage Inequality in Germany after the Minimum Wage Introduction," Journal of Labor Economics, University of Chicago Press, vol. 41(3), pages 813-857.
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    More about this item

    Keywords

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    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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