Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case

The minimum wage has become a standard measure in the economic and social policies of countries all over the world. The primary objective of this measure is to guarantee that workers receive a minimum wage that allows them to lead a decent life, thereby reducing inequality and poverty. However, stud...

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Authors: Paz Báñez, Manuela Adelaida de, Sánchez López, Celia, Asensio Coto, María José
Format: article
Publication Date:2024
Country:España
Institution:Universidad de Huelva (UHU)
Repository:Arias Montano. Repositorio Institucional de la Universidad de Huelva
Language:English
OAI Identifier:oai:ariasmontano.uhu.es:10272/24098
Online Access:https://hdl.handle.net/10272/24098
Access Level:Open access
Keyword:Minimum wage
MW
Inequality
Poverty
Systematic review
PRISMA
Difference-indifferences
Spain
53 Ciencias Económicas
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spelling Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish CasePaz Báñez, Manuela Adelaida deSánchez López, CeliaAsensio Coto, María JoséMinimum wageMWInequalityPovertySystematic reviewPRISMADifference-indifferencesSpain53 Ciencias EconómicasThe minimum wage has become a standard measure in the economic and social policies of countries all over the world. The primary objective of this measure is to guarantee that workers receive a minimum wage that allows them to lead a decent life, thereby reducing inequality and poverty. However, studies on the minimum wage have not focused on assessing the effects on these dimensions but only on employment. The objective of this study is to address this research gap by analysing the effects of minimum wage increases on income inequality and poverty. To this end, firstly, a systematic review of the empirical analyses was conducted using the PRISMA methodology, with a view to ensuring that all empirical evidence was available. Secondly, the Spanish case was examined. The significant increase in minimum wage in Spain in 2019 (21.3% in real terms) presents an invaluable opportunity to utilise this event as a natural experiment to generate new evidence. A difference-in-differences approach was employed to assess the impact of this phenomenon in the period 2018–2019 with microdata from European Statistics on Income and Living Conditions (EUSILC for Spain). In doing so, two basic scientific contributions were made. The first one, a systematic, exhaustive, and up-to-date literature review (up to June 2024), as there is, to our knowledge, no recent systematic review of this relationship (minimum wage vs. inequality). The available evidence indicates a clear inverse relationship between the minimum wage and inequalities and poverty. The second one, regarding the Spanish case, there has been a dearth of scientific studies on this subject. Thus, this paper provides new scientific evidence demonstrating that a significant increase in the minimum wage can significantly improve the income of low-wage earners, thereby reducing income inequality and in-work poverty. Furthermore, there is evidence of a spillover effect towards income groups closer to the treatment group.MDPI20242024-06-0120242024-06-01journal articlehttp://purl.org/coar/resource_type/c_6501VoRhttp://purl.org/coar/version/c_970fb48d4fbd8a85info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/10272/24098reponame:Arias Montano. Repositorio Institucional de la Universidad de Huelvainstname:Universidad de Huelva (UHU)Inglésengopen accesshttp://purl.org/coar/access_right/c_abf2Atribución-NoComercial-SinDerivadas 3.0 Españahttp://creativecommons.org/licenses/by-nc-nd/3.0/es/info:eu-repo/semantics/openAccessoai:ariasmontano.uhu.es:10272/240982026-06-02T14:58:11Z
dc.title.none.fl_str_mv Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
title Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
spellingShingle Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
Paz Báñez, Manuela Adelaida de
Minimum wage
MW
Inequality
Poverty
Systematic review
PRISMA
Difference-indifferences
Spain
53 Ciencias Económicas
title_short Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
title_full Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
title_fullStr Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
title_full_unstemmed Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
title_sort Effects of the Minimum Wage (MW) on Income Inequality: Systematic Review and Analysis of the Spanish Case
dc.creator.none.fl_str_mv Paz Báñez, Manuela Adelaida de
Sánchez López, Celia
Asensio Coto, María José
author Paz Báñez, Manuela Adelaida de
author_facet Paz Báñez, Manuela Adelaida de
Sánchez López, Celia
Asensio Coto, María José
author_role author
author2 Sánchez López, Celia
Asensio Coto, María José
author2_role author
author
dc.contributor.none.fl_str_mv
dc.subject.none.fl_str_mv Minimum wage
MW
Inequality
Poverty
Systematic review
PRISMA
Difference-indifferences
Spain
53 Ciencias Económicas
topic Minimum wage
MW
Inequality
Poverty
Systematic review
PRISMA
Difference-indifferences
Spain
53 Ciencias Económicas
description The minimum wage has become a standard measure in the economic and social policies of countries all over the world. The primary objective of this measure is to guarantee that workers receive a minimum wage that allows them to lead a decent life, thereby reducing inequality and poverty. However, studies on the minimum wage have not focused on assessing the effects on these dimensions but only on employment. The objective of this study is to address this research gap by analysing the effects of minimum wage increases on income inequality and poverty. To this end, firstly, a systematic review of the empirical analyses was conducted using the PRISMA methodology, with a view to ensuring that all empirical evidence was available. Secondly, the Spanish case was examined. The significant increase in minimum wage in Spain in 2019 (21.3% in real terms) presents an invaluable opportunity to utilise this event as a natural experiment to generate new evidence. A difference-in-differences approach was employed to assess the impact of this phenomenon in the period 2018–2019 with microdata from European Statistics on Income and Living Conditions (EUSILC for Spain). In doing so, two basic scientific contributions were made. The first one, a systematic, exhaustive, and up-to-date literature review (up to June 2024), as there is, to our knowledge, no recent systematic review of this relationship (minimum wage vs. inequality). The available evidence indicates a clear inverse relationship between the minimum wage and inequalities and poverty. The second one, regarding the Spanish case, there has been a dearth of scientific studies on this subject. Thus, this paper provides new scientific evidence demonstrating that a significant increase in the minimum wage can significantly improve the income of low-wage earners, thereby reducing income inequality and in-work poverty. Furthermore, there is evidence of a spillover effect towards income groups closer to the treatment group.
publishDate 2024
dc.date.none.fl_str_mv 2024
2024-06-01
2024
2024-06-01
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
VoR
http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10272/24098
url https://hdl.handle.net/10272/24098
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
Atribución-NoComercial-SinDerivadas 3.0 España
http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
Atribución-NoComercial-SinDerivadas 3.0 España
http://creativecommons.org/licenses/by-nc-nd/3.0/es/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv MDPI
publisher.none.fl_str_mv MDPI
dc.source.none.fl_str_mv reponame:Arias Montano. Repositorio Institucional de la Universidad de Huelva
instname:Universidad de Huelva (UHU)
instname_str Universidad de Huelva (UHU)
reponame_str Arias Montano. Repositorio Institucional de la Universidad de Huelva
collection Arias Montano. Repositorio Institucional de la Universidad de Huelva
repository.name.fl_str_mv
repository.mail.fl_str_mv
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