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Minimum Wages and the Wage Distribution in Estonia

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  • Ferraro, Simona
  • Meriküll, Jaanika
  • Staehr, Karsten

Abstract

This article studies how changes in the statutory minimum wage have affected the wage distribution in Estonia, a post-transition country with little collective bargaining and relatively large wage inequality. The analyses show that the minimum wage has had substantial spillover effects on wages in the lower tail of the distribution; the effects are most pronounced up to the twentieth percentile and then decline markedly. The minimum wage has contributed to lower wage inequality and this has particularly benefitted low-wage segments of the labour market such as women and the elderly. Interestingly, the importance of the minimum wage for the wage distribution was smaller during the global financial crisis than before or after the crisis.

Suggested Citation

  • Ferraro, Simona & Meriküll, Jaanika & Staehr, Karsten, 2018. "Minimum Wages and the Wage Distribution in Estonia," MPRA Paper 87041, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:87041
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    Cited by:

    1. Jaanika Meriküll & Maryna Tverdostup, 2020. "The Gap That Survived The Transition: The Gender Wage Gap Over Three Decades In Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 127, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    2. Konstantins Benkovskis & Ludmila Fadejeva & Anna Pluta & Anna Zasova, 2023. "Keeping the best of two worlds: Linking CGE and microsimulation models for policy analysis," Working Papers 2023/01, Latvijas Banka.
    3. Jaan Masso & Vladyslav Soloviov & Kerly Espenberg & Inta Mierina, 2019. "Social convergence of the Baltic states within the enlarged EU: Is limited social dialogue an impediment?," Chapters, in: Daniel Vaughan-Whitehead (ed.), Towards Convergence in Europe, chapter 2, pages 35-77, Edward Elgar Publishing.
    4. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2021. "Winners and losers after 25 years of transition: Decreasing wage inequality in Slovenia," Economic Systems, Elsevier, vol. 45(2).
    5. Biljana Jovanovic & Nikola Naumovski, 2021. "Minimum wage reform and firms’ performance – evidence from North Macedonia," Working Papers 2021-02, National Bank of the Republic of North Macedonia.
    6. Eva Lajtkepová, 2020. "Distribution of Wages in the Regions of the Czech Republic," ACTA VSFS, University of Finance and Administration, vol. 14(2), pages 123-136.
    7. Garcia-Louzao, Jose & Tarasonis, Linas, 2023. "Wage and Employment Impact of Minimum Wage: Evidence from Lithuania," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 592-609.
    8. Xiaoshi Zhou & Wanglin Ma & Gucheng Li & Huanguang Qiu, 2020. "Farm machinery use and maize yields in China: an analysis accounting for selection bias and heterogeneity," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1282-1307, October.
    9. Masso, Jaan & Meriküll, Jaanika & Vahter, Priit, 2022. "The role of firms in the gender wage gap," Journal of Comparative Economics, Elsevier, vol. 50(2), pages 454-473.
    10. Katalin Bodnár & Ludmila Fadejeva & Stefania Iordache & Liina Malk & Desislava Paskaleva & Jurga Pesliakaitė & Nataša Todorović Jemec & Peter Tóth & Robert Wyszyński, 2018. "How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-30, December.
    11. Song, Teresa, 2024. "Why did gender inequality lag GDP per capita and human development growth in Korea over 1976-1996?," LSE Research Online Documents on Economics 122006, London School of Economics and Political Science, LSE Library.
    12. Paul Redmond & Karina Doorley & Seamus McGuinness, 2021. "The impact of a minimum wage change on the distribution of wages and household income," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1034-1056.
    13. Meriküll, Jaanika & Tverdostup, Maryna, 2023. "The gap that survived the transition: The gender wage gap in Estonia over three decades," Economic Systems, Elsevier, vol. 47(3).

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    More about this item

    Keywords

    Minimum wage; wage distribution; spillover effects; inequality; Central and Eastern Europe; global financial crisis;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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