The impact of minimum wages on income inequality in the EU

Arbeitspapier

A number of studies documents that minimum wage policies have the potential to reduce income inequality. The recently adopted EU Commission's proposal for a Directive on adequate minimum wages was supported by a detailed analysis of the social impacts of hypothetical minimum wage levels in countries with a statutory minimum wage. This paper extends these country-level analyses by exploring the impact of minimum wage policies on EU-level income inequality. To our knowledge, this is the first study that uses a microsimulation model such as EUROMOD to assess the impact of EU-promoted policies on the distribution of income in the EU, beyond their national effects. Assuming no employment effects, static simulation results show that a hypothetical minimum wage corresponding to 60% of the national median wage would bring about a small but significant reduction in EU-level disposable income inequality (by 0.75% in 2019 as measured through the Gini index). This result stems primarily from a reduction in the within-country component of income inequality as the effect on inequality between countries is rather muted. The reduction in EU-level income inequality is the highest in disposable incomes, but some reduction is detectable also in market incomes. In turn, the withdrawal of social benefits because of higher minimum wages seems to neutralise part of this inequality reduction.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: JRC Working Papers on Taxation and Structural Reforms ; No. 04/2023

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Measurement and Analysis of Poverty ; Wage Level and Structure; Wage Differentials
• Thema: Minimum wage ; Microsimulation ; European Union ; Income inequality ; EUROMOD

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Filauro, Stefano ; Grünberger, Klaus ; Narazani, Edlira
• Ereignis: Veröffentlichung
• (wer): European Commission, Joint Research Centre (JRC)
• (wo): Seville
• (wann): 2023

Weitere Informationen

• Handle: http://hdl.handle.net/10419/280873
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ