The Impact on Inequality of Raising the Minimum Wage: Gap‐narrowing and Reranking Effects
Diego F. Angel‐Urdinola and
Authors registered in the RePEc Author Service: Diego F. Angel-Urdinola
LABOUR, 2004, vol. 18, issue 2, 317-327
Raising the minimum wage may reduce inequality by increasing the wages of low‐skill workers, but it may also increase inequality due to negative impacts on employment that produce wage losses. Using previous estimates of the elasticities of wages and employment to changes in the minimum wage in Colombia and Brazil, we show that the net impact on inequality of increasing the minimum wage may depend on the distributional weights used for inequality measurement. The results are obtained by decomposing the Gini index into reranking and gap‐narrowing effects. Inequality‐increasing reranking effects, which are associated with job losses, may dominate inequality‐decreasing gap‐narrowing effects, which are associated with wage gains, when high weights are placed on workers with low earnings. For standard distributional weights, however, the likely net impact is a reduction in wage inequality.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: The impact on inequality of raising the minimum wage: Gap- narrowing and reranking effects (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:labour:v:18:y:2004:i:2:p:317-327
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1121-7081
Access Statistics for this article
LABOUR is currently edited by Franco Peracchi
More articles in LABOUR from CEIS Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().