Social and fiscal impacts of statutory minimum wages in EU countries: A microsimulation analysis with EUROMOD

Klaus Grünberger (), Edlira Narazani, Stefano Filauro () and Áron Kiss
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Stefano Filauro: European Commission - Directorate-General for Employment, Social Affairs and Inclusion

No 2021-06, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre

Abstract: This paper analyses the first-round effects of hypothetical minimum wage increases on social outcomes in 21 EU countries with a statutory national minimum wage based on a microsimulation approach using EUROMOD. The methodological challenges related to the use of available EU household survey data are described, along with the choices made to address these challenges. The paper assesses hypothetical scenarios in which countries with a statutory national minimum wage increase their minimum wage to various reference values, set in relation to the gross national median and average wage. The model simulations suggest that minimum wage increases can significantly reduce in-work poverty, wage inequality and the gender pay gap, while generally improving the public budget balance. The implied wage increases for the beneficiaries are substantial, while the implied increases in the aggregate wage bill and, as a consequence, possible negative employment impacts, are generally modest.

Keywords: minimum wage; microsimulation; European Union; wage inequality; in-work poverty; gender pay gap. (search for similar items in EconPapers)
JEL-codes: H31 I32 J31 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2021-05
New Economics Papers: this item is included in nep-cmp and nep-lma
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Journal Article: Social and fiscal impacts of statutory minimum wages in EU countries: a microsimulation analysis with EUROMOD (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:taxref:202106

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