Minimum Wages, Labor Market Institutions, and the Distribution of Earnings in Iran

Massoud Karshenas ()
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Massoud Karshenas: University of London

No 1478, Working Papers from Economic Research Forum

Abstract: We examine the impact of minimum wages on the distribution of earnings in Iran. Specifically, we show that minimum wages have played a critical role in the distribution of earnings and the distribution of household income. We identify a perverse relationship between minimum wages and distribution of earnings, which is contrary to the observed relationships in other developed and developing countries. To explain this anomaly, we investigate the role of minimum wages in the overall wage-setting institutionsin the country and conduct decomposition analysis by reweighting methods that separate the effect of individual attributes from wage structure effects. The paper concludes by highlighting some of the broader implications of our findings for future research on inflation, unemployment and competitiveness in oil economies like Iran

Pages: 40
Date: 2021-08-20, Revised 2021-08-20
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Published by The Economic Research Forum (ERF)

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