scholarly journals A First Glance at the Minimum Wage Incidence in Lithuania Using Social Security Data*

Ekonomika ◽  
2021 ◽  
Vol 100 (1) ◽  
pp. 31-53
Author(s):  
Jose Garcia-Louzao ◽  
Linas Tarasonis

This document explores the incidence of the minimum wage in Lithuania. The descriptive analysis exploits high-frequency data on monthly labor income coming from Social Security records between July 2013 and July 2020 to characterize (i) the evolution of the monthly minimum wage, (ii) the percentage of workers who earn the minimum wage, (iii) the bite of the minimum wage in the wage distribution, and (iv) the heterogeneity of the findings with respect to gender and age. The evidence shows that the minimum wage was raised 7 times with an average (real) increase of 7.3% and, on average, less than 10% of the workers earn at most the minimum wage but low-pay incidence is around 20%. In terms of the impact of the wage distribution, the minimum wage relative to the average wage in the economy fluctuates between 45 and 50 percent. Females and young workers exhibit a larger low-pay incidence and minimum wage bite.

2020 ◽  
Author(s):  
Paul Redmond ◽  
Karina Doorley ◽  
Seamus McGuinness

Abstract We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately 8 and 4%, respectively. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.


2021 ◽  
pp. 0143831X2110358
Author(s):  
Simon Ress ◽  
Florian Spohr

This contribution scrutinises how introducing a statutory minimum wage of EUR 8.50 per hour, in January 2015, impacted German employees’ decision with regard to union membership. Based on representative data from the Labour Market and Social Security panel, the study applies a logistic difference-in-differences propensity score matching approach on entries into and withdrawals from unions in the German Trade Union Confederation (Deutscher Gewerkschaftsbund, DGB). The results show no separate effect on withdrawals from or entries into unions after the minimum wage introduction for those employees who benefited financially from it, but a significant increase of entries overall. Thus, unions’ campaign for a minimum wage strengthened their position in total but did not reverse the segmentation of union membership patterns.


2021 ◽  
Vol 12 (1) ◽  
pp. 21
Author(s):  
Susana Herrero Olarte

There is a general trend in the South American region to increase the minimum wage (MW) to reduce poverty and inequality. However, empirical studies are inconclusive with respect to the effect of the MW. This study seeks to contribute to the empirical evidence regarding the impact of this policy by exploring its limitations and possibilities for reducing poverty in Ecuador. Unlike other studies, a measure to capture informality in the labor market is included. Using fixed effect estimation with panel data, I determine the relationship between labor income deciles and variations in the MW, using a proxy for its effectiveness. The results suggest that the MW positively affects the lower income deciles, to a lesser extent the intermediate deciles and with no effect on the higher ones. However, when considering a control for the degree of informality in the labor market, the effect on the lower deciles is mitigated. Therefore, increases in the MW may be a strategy to increase the income of the middle and vulnerable class, but it does not seem to be useful for reducing poverty.


2019 ◽  
Vol 11 (9) ◽  
pp. 2542
Author(s):  
Eva Militaru ◽  
Madalina Ecaterina Popescu ◽  
Amalia Cristescu ◽  
Maria Denisa Vasilescu

Starting from the consideration that excessive income inequalities could hamper sustainable growth, our paper aims to evaluate the impact of the minimum wage policy upon wage and income distributions. Using the European Union Survey on Income and Living Conditions (EU-SILC) database with national representative sample of households, an income distribution analysis was conducted for the case of Romania based on two microsimulation approaches. The first one assumed building a counterfactual income distribution under the hypothesis of no change in minimum wage, while the second one implied a decomposition of the Gini coefficient of income inequalities based on main income determinants, including the minimum wage level and the share of minimum wage earners in the total number of employees. Both approaches pointed to similar findings, indicating a positive effect of the minimum wage on wage inequalities reduction for both genders, although higher for women, as they are more present among lower paid employees. The minimum wage policy can reshape the wage distribution, by enlarging the share of minimum income earners and narrowing the middle. Moreover, the household disposable income becomes less unequal when minimum wage increases, meaning that the income gain spreads over the entire household as most minimum wage earners come from poor households with numerous children.


2015 ◽  
Vol 6 (3) ◽  
Author(s):  
Frederico Luiz Barbosa De Melo

<p>This article summarises the Brazilian experience on the minimum wage campaign and the results and challenges brought by the increase in real value of the minimum wage. In 2005 and 2006, the minimum wage in Brazil underwent significant increases, and in 2006 an agreement about a long-term process to elevate its purchasing power was established between the government and the labour union centrals; in 2011 the agreement became law, defining the per cent of adjustment and real increase until 1 January 2015, and this year the law will have to be reviewed. In the last decade, Brazilian income inequality diminished, and the gains of the minimum wage seem to have an effective role in this process. After describing briefly the trajectory and legislation of the minimum wage in Brazil, the article shows how many individuals receive the equivalent of one minimum wage, either in the labour market or as a social security benefit. Some data about the wage distribution and inequality are also presented and discussed. The process of increase of the purchasing power of the minimum wage is now at risk insofar as the economy slows down since, according to the law, its gain is determined by GDP growth. Other difficulties are set by the impacts of the increase of the minimum wage over social security expenditures. The high concentration of salaries between 1 and 1.5 minimum wage and the current value of 43.4% to the proportion between the minimum wage and the median wage of full-time workers signals a stronger resistance against the long-term improvement of the minimum wage in Brazil.</p>


2005 ◽  
Vol 9 (1) ◽  
pp. 57-97 ◽  
Author(s):  
JORGE SOARES

I study the bias of actuarially fair measures commonly used to evaluate the impact of a social security system on the well-being of individuals. I investigate how the magnitude of this bias is affected by different features of a pay-as-you-go social security system. Social security affects an individual's welfare in ways other than through its direct effect on her lifetime income. It influences labor and savings decisions and hence factor prices, affecting labor income and the return to savings. Although social security can provide insurance against risk, it can also push borrowing-constrained individuals further away from their optimal consumption paths. I show that, by ignoring these features, actuarially fair measures can grossly misevaluate the impact of social security on the well-being of an individual.


1997 ◽  
Vol 1 (1) ◽  
pp. 7-44 ◽  
Author(s):  
HE HUANG ◽  
SELAHATTIN İMROHOROGˇLU ◽  
THOMAS J. SARGENT

We use a general equilibrium model to study the impact of fully funding social security on the distribution of consumption across cohorts and over time. In an initial stationary equilibrium with an unfunded social security system, the capital/output ratio, debt/output ratio, and rate of return to capital are 3.2, 0.6, and 6.8%, respectively. In our first experiment, we suddenly terminate social security payments but compensate entitled generations by a massive one-time increase in government debt. Eventually, the aggregate physical capital stock rises by 40%, the return on capital falls to 4.4%, and the labor income tax rate falls from 33.9 to 14%. We estimate the size of the entitlement debt to be 2.7 times real GDP, which is paid off by levying a 38% labor income tax rate during the first 40 years of the transition. In our second experiment, we leave social security benefits untouched but force the government temporarily to increase the tax on labor income so as gradually to accumulate private physical capital, from the proceeds of which it eventually finances social security payments. This particular government-run funding scheme delivers larger efficiency gains (in both the exogenous and endogenous price cases) than privatization, an outcome stemming from the scheme's public provision of insurance both against life-span risk and labor income volatility.


Author(s):  
Mohamed Abrich ◽  
Mohamed Amine Lahlou

Morocco passed minimum wage legislation as early as 1936 with the aim of defining minimum pay levels for employees in urban and rural areas. Decisions to increase the minimum wage (guaranteed minimum wage) and SMAG (minimum guaranteed agricultural wage), which serve as minimum wages in the non-agricultural and agricultural sectors, respectively, do not follow a pre-established timetable but arise from exchanges between different stakeholders within the framework of social dialogue. Since the early 2000s, around ten increases have been implemented on the minimum wage, however, no scientific publication analyzing their effects on the Moroccan economy has been carried out. Thus, the objective of the study published by BAM is to examine the impact of revaluations of the minimum wage on a set of macroeconomic variables of interest to the decision-maker. The study reviews the criteria for setting the minimum wage and its macroeconomic effects. Then on the stylized facts that characterize the minimum wage in Morocco, particularly in relation to wage distribution, employment, informality and youth unemployment. The study also explores the links between minimum wage, overall salary and employment. Finally, a simulation of the effects of the increase in the minimum wage on the Moroccan economy is carried out based on a more structural model derived from the IMF's FSGM model.


2019 ◽  
Vol 15 (4) ◽  
pp. 21-35
Author(s):  
Lyudmila Migranova ◽  
Raisa Popova

The Object of the Study. Wages in Russiya and in its regionsThe Subject of the Study. Levels and differentiation of wages The Purpose of the Study is examining the impact of raising the minimum wage up to the subsistence minimum level of the able-bodied population in 2018-2019 on the dynamics of the main characteristics of wages at the federal and regional levels. The Main Propositions of the Article. The problem of spatial inequality includes socioeconomic inequality of the population which primarily depends on work remuneration as the main source of monetary income of households. The problems of work remuneration in the post-Soviet period are well-known – low levels, relatively high wage differentiation including cross-sectoral and cross-regional disparities. These were caused to a large extent by the low level of the minimum wage in the country. In May 2018 the minimum wage was raised up to the subsistence minimum level (poverty line) of the able-bodied population. Using the data from the wage surveys conducted by Rosstat in 2017 and 2019 the authors analyse the shifts in wage distribution of workers in Russiya and in its regions. The increase in the minimum wage resulted in a decline in the general differentiation of wages across the country and in the vast majority of regions, in reduction of the intra-industry and cross-regional differences. In 2019 the funds ratio (ratio of mean wages of the upper and the bottom deciles) exceeded 10 only in six regions, while in 2017 there were 29 such regions. In 2017 that ratio was below 8 only in 6 regions, in 2019 – in 45 regions, and in most of them (26) the average wage was 3 times below the subsistence minimum level of the able-bodied population. The analysis has shown that the low level of wages of most employees still remains an urgent problem, and reduction in wage inequality also has the reverse aspect. We know from the Soviet experience that low (as well as high) level of wage inequality does not promote work incentives and socioeconomic development of territories.


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