Minimum Wages in New Zealand: Policy and Practice in the 21st Century

David Maré and Dean Hyslop

No 14302, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: New Zealand has seen dramatic changes in minimum wage policies since 2000. The adult minimum wage has increased 75% in CPI-adjusted real terms. In addition, the youth minimum wage was abolished in two stages, resulting in a 125% increase in the real minimum wage for 16–19-year-old workers. We review the motivations for minimum wages and the changes and analyse how they have affected workers outcomes. We find that the minimum wage now strongly determines the wages of teenage workers, with the minimum wage now at the median wage of teenagers, and over half of 16–17-year-olds, and about 40% of 18–19-year-olds, earning at or below the minimum. Although we find no clear evidence that increases in the minimum wage have led to adverse employment effects, we expect there are downside risks for youth and low skilled workers' employment. As minimum wage workers are broadly spread across the household income distribution, we conclude that minimum wages are largely ineffective as a redistributive income support policy.

Keywords: minimum wages; employment; earnings inequality; income inequality (search for similar items in EconPapers)
JEL-codes: J21 J23 J24 J31 J38 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2021-04
New Economics Papers: this item is included in nep-cwa and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Minimum Wages in New Zealand: Policy and practice in the 21st century (2021)
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