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How is the Minimum Wage Shaping the Wage Distribution: Minimum Wage, Spillovers, and Wage Inequality in Portugal

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  • Oliveira, Carlos

Abstract

Over the last three decades, wage inequality and the importance of the minimum wage presented a nearly symmetric behavior in Portugal. Applying a semiparametric approach, this paper presents significant visual and quantitative evidence of how the MW structurally reshaped the wage distribution. The remarkable rise in the real MW of 2006-2019 explained virtually all of the decline in wage inequality, and 40% of the average wage growth, mostly driven by spillovers, which cascaded way above the minimum. The MW was most important for women, although spillovers were greater for men. Exploring the total-base wage differential also uncovered important new insights.

Suggested Citation

  • Oliveira, Carlos, 2021. "How is the Minimum Wage Shaping the Wage Distribution: Minimum Wage, Spillovers, and Wage Inequality in Portugal," MPRA Paper 112534, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112534
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    Cited by:

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    More about this item

    Keywords

    labour economics; minimum wage; spillovers; wage inequality; wage distribution; counterfactual decomposition; distribution regression; rank regression; kernel density; reweighting;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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