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From Many to One: Minimum Wage Effects in Thailand

Author

Listed:
  • Dilaka Lathapipat
  • Cecilia Poggi

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.

Suggested Citation

  • Dilaka Lathapipat & Cecilia Poggi, 2016. "From Many to One: Minimum Wage Effects in Thailand," PIER Discussion Papers 41, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:41
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    File URL: https://www.pier.or.th/files/dp/pier_dp_041.pdf
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    Citations

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    Cited by:

    1. Samutpradit, Saisawat, 2024. "Employment effects of minimum wages in a dual economy: Evidence from Thailand," Journal of Development Economics, Elsevier, vol. 168(C).
    2. Mr. Christopher S Adam & Mr. Edward F Buffie, 2020. "The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence," IMF Working Papers 2020/023, International Monetary Fund.
    3. Adriana D. Kugler, 2019. "Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America," IMF Working Papers 2019/155, International Monetary Fund.
    4. Srisompun, Orawan & Athipanyakul, Thanaporn & Isvilanonda, Somporn, 2019. "The adoption of mechanization, labour productivity and household income: Evidence from rice production in Thailand," TVSEP Working Papers wp-016, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    5. Wannaphong Durongkaveroj, 2022. "Does the minimum wage improve the welfare of workers? Evidence from the 2013 minimum wage reform in Thailand," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 52-70, November.
    6. Phouphet Kyophilavong & Kazunobu Hayakawa, 2024. "Impacts of Trade Liberalization in the Least Developed Countries: Evidence From Lao PDR," The Developing Economies, Institute of Developing Economies, vol. 62(1), pages 45-67, March.
    7. Pérez Pérez, Jorge, 2020. "The minimum wage in formal and informal sectors: Evidence from an inflation shock," World Development, Elsevier, vol. 133(C).

    More about this item

    Keywords

    Minimum wage; Wage structure; Recentered Influence Function;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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