The minimum wage as a wage equality policy: Evidence from North Macedonia
The paper aims to investigate if the minimum wage increase of September 2017 resulted in better wage equality in North Macedonia. The increase of 19% was sizable and included levelling up in the three sectors with a lower minimum wage: textiles, apparel, and leather. We extend the ‘cell’ ap...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Faculty of Economics, Belgrade
2019-01-01
|
| Series: | Ekonomski Anali |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/0013-3264/2019/0013-32641923061P.pdf |
| Summary: | The paper aims to investigate if the minimum wage increase of September 2017
resulted in better wage equality in North Macedonia. The increase of 19% was
sizable and included levelling up in the three sectors with a lower minimum
wage: textiles, apparel, and leather. We extend the ‘cell’ approach of Card
(1992a) and rely on data from the Labour Force Survey 2017 and 2018. The
results suggest that the 2017 increase in the minimum wage had a positive,
significant, and robust effect on wages. However, the wage increases were
almost entirely positioned on the left side of the wage distribution and
implied wage compression up to or around the minimum wage. The bunching
around the new minimum wage level ‘equalised’ workers: those who previously
earned the new minimum wage level equalised with the less productive workers
who approximated their wage only by the power of the law. Hence, wage
equality improved. The results confirm that the minimum wage can be an
important wage equality policy, with considerably limited upward spillover
effects in the current policy and institutional setup. |
|---|---|
| ISSN: | 0013-3264 1820-7375 |