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Wage inequality, minimum wage effects and spillovers

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Stewart, Mark B. (2011) Wage inequality, minimum wage effects and spillovers. Working Paper. Coventry: University of Warwick. Dept. of Economics. (Warwick economics research paper series (TWERPS), Vol.2011).

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Abstract

This paper investigates possible spillover effects of the UK minimum wage. The halt in the growth in inequality in the lower half of the wage distribution (as measured by the 50:10 percentile ratio) since the mid 1990s, in contrast to the continued inequality growth in the upper half of the distribution, suggests the possibility of a minimum wage effect and spillover effects on wages above the minimum. This paper analyses individual wage changes, using both a difference-in-differences estimator and a specification involving cross-uprating comparisons, and concludes that there have not been minimum wage spillovers. Since the UK minimum wage has always been below the 10th percentile, this lack of spillovers implies that minimum wage changes have not had an effect on the 50:10 percentile ratio measure of inequality in the lower half of the wage distribution.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Income distribution -- Great Britain, Minimum wage -- Great Britain
Series Name:	Warwick economics research paper series (TWERPS)
Publisher:	University of Warwick. Dept. of Economics
Place of Publication:	Coventry
Date:	2011
Volume:	Vol.2011
Number:	No.965
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC), Great Britain. Low Pay Commission (LPC)
Grant number:	RES000222611 (ESRC)
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URI:	http://wrap.warwick.ac.uk/id/eprint/41110