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Can the introduction of a minimum wage in FYR Macedonia decrease the gender wage gap?

Diego Angel-Urdinola

No 46851, Social Protection Discussion Papers and Notes from The World Bank

Abstract: This paper relies on simple framework to understand the gender wage gap in Macedonia and then simulates how the gender wage gap would behave after the introduction of a minimum wage. First, it presents a new albeit simple decomposition of the wage gap into three factors: (i) a wage level factor, that measures the extent to which the gender gap is driven by differences in wage levels among low-skilled workers of oppositesex; (ii) an skills endowment factor, that quantifies the extent to which the gender wage gap is driven because the share of high-skilled workers differs by gender; and (iii) returns to education factor, that measures the extent to which the gender gap exists is driven by differences by gender in returns to education. Second, the paper presents simple set of simulations that indicate that the introduction of a minimum wage in Macedonia can contribute to decrease the gender wage gap by up to 23 percent. Nevertheless, in order to get a significant improvement in the wage gap a rather high minimum wage may required, which may contribute to reductions in employment.

Keywords: Labor Markets; Gender and Development; Labor Policies; Access to Finance (search for similar items in EconPapers)
Date: 2008-12-01
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