From Many to One: Minimum Wage Effects in Thailand

Dilaka Lathapipat and Cecilia Poggi

No 41, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This article examines the effects of changing the minimum wage policy structure in Thailand, from multilevel wages set geographically to a single statutory minimum. It exploits the recent hike in the minimum wage to evaluate the effects on employment and wage distribution. We find that employment is weakly affected, with reductions in youth unskilled employment and localised downward adjustments for SMEs. Furthermore, wage distribution seems to have improved. Using an application of the Recentered Influence Function applied to provincial wage distributions, we show that wages are affected up to the 60th percentile, suggesting that minimum wage levels serve as numeraire for wage renegotiation in a Middle Income country context. The hike in the minimum has benefited workers in the 15–45th percentiles, with no discernible effects in the lowest quantiles which appear to be driven by non-compliance among microenterprises.

Keywords: Minimum wage; Wage structure; Recentered Influence Function (search for similar items in EconPapers)
JEL-codes: C21 D31 J31 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2016-08
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Citations: View citations in EconPapers (9)

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