How is the Minimum Wage Shaping the Wage Distribution: Minimum Wage, Spillovers, and Wage Inequality in Portugal

Oliveira, Carlos (2021): How is the Minimum Wage Shaping the Wage Distribution: Minimum Wage, Spillovers, and Wage Inequality in Portugal.

Abstract

Over the last three decades, wage inequality and the importance of the minimum wage presented a nearly symmetric behavior in Portugal. Applying a semiparametric approach, this paper presents significant visual and quantitative evidence of how the MW structurally reshaped the wage distribution. The remarkable rise in the real MW of 2006-2019 explained virtually all of the decline in wage inequality, and 40% of the average wage growth, mostly driven by spillovers, which cascaded way above the minimum. The MW was most important for women, although spillovers were greater for men. Exploring the total-base wage differential also uncovered important new insights.

• Item Type: MPRA Paper
• Language: English
• Keywords: labour economics, minimum wage, spillovers, wage inequality, wage distribution, counterfactual decomposition, distribution regression, rank regression, kernel density, reweighting
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy

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