The impact of a minimum wage change on the distribution of wages and household income

Abstract We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by a...

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Bibliographic Details
Published in:Oxford economic papers 2021-07, Vol.73 (3), p.1034-1056
Main Authors: Redmond, Paul, Doorley, Karina, McGuinness, Seamus
Format: Article
Language:English
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Summary:Abstract We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately 8 and 4%, respectively. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.
ISSN:0030-7653
1464-3812
DOI:10.1093/oep/gpaa048