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This chapter examines how minimum wage changes affect wages and earnings, first describing how minimum wages affect the wage distribution. The effect of the minimum wage on the distribution of earnings is not as straightforward as its effect on the distribution of wages, and thus the second goal of the chapter is to provide a more complete description of how the minimum wage influences labor income—both for workers directly affected by the minimum wage and for workers who might be indirectly affected via spillover effects. To this end, it presents evidence on how minimum wages affect workers at different points in the wage distribution. This evidence examines a broader set of margins along which workers at different points in the wage distribution may be affected, including wages, employment, hours, and, ultimately, labor income.

Using the CHIP survey data, this study analyzes the effects of the minimum wage (MW) policy on wage distribution in urban China from 1993 to 2013. Several major conclusions emerge. Ordinary least squares and quantile regression model estimates show that the MW affected both the average wage and the wages of the low-wage groups during 1993–1995, 1998–2002, and 2007–2013, with the greatest effect during the 1993–1995 period. Neumark, Schweitzer, and Wascher model estimates indicate that the change in the MW level affected changes in the wage level for low-wage groups during 1993–1995 and 1998–2002, with the greatest effect during the 1993–1995 period. A difference-in-differences model indicates that even when heterogeneity problems are addressed, the MW considerably affected the wage levels of low-wage groups during all three periods. All of the estimation results reveal the presence of a spillover effect in 1993–1995 but not in 1998–2002 or 2007–2013.

This chapter uses the model derived in Chapter 3 to examine the relationship between observed wage distributions before and after a minimum wage change. It discusses results using unconditional wage distributions; results for conditional wage distributions; results using matched data; welfare impacts of the 1996 and 1997 statutory minimum wage increases; and data and empirical results.

This chapter first provides an overview of the levels of minimum wages in Latin America and their true impact on the distribution of wages using both numerical measures and kernel density plots for eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Honduras, Mexico, and Uruguay). In particular, it attempts to identify effects higher in the wage distribution and in the unregulated or “informal” sector. The central message is that the minimum wage has impacts on wage setting far beyond those usually contemplated and likely beyond those found in the industrialized countries. The final section then employs panel employment data from Colombia, a country where minimum wages seem high and very binding, to quantify these effects and their impact on employment.

This chapter applies the model developed in Chapter 3 in order to examine the manner in which a change in the statutory minimum wage affects equilibrium in the labor market, as well as the welfare of agents on the supply and demand sides of the market. It begins by looking at how shifts in the minimum wage affect the unemployment rate and the accepted wage distribution. This is followed by a section that develops and motivates a number of welfare measures within a Benthamite social welfare framework.

This chapter presents a few more details on the Swedish labor market, and then conducts formal descriptive analyses to document these changes throughout the 1970s and 1980s. The matched employee–employer data is used. The analysis of wage levels and wage changes, as well as the trends in worker mobility are elaborated. The chapter shows that the decrease in wage variation during the 1970s and the increase in the 1980s were due to increased variation of wages within firms and increased variation across firms. In addition, people in the low part of the wage distribution have the least to lose by changing jobs, and this relationship gets stronger all the way to the bottom of the wage distribution within firms. The job turnover and wage compression trends are strong for both blue- and white-collar workers in Sweden.

This chapter demonstrates that the minimum wage has a larger effect on the wage distribution than commonly believed. It makes this case by discussing both British and American evidence. It first provides a brief overview of the history of the National Minimum Wage (NMW) and some evidence on its impact. It then considers evidence for spillover effects in the UK and the US; why there might be spillovers; and the implications of recognizing the existence of spillovers for the setting of the NMW.

This chapter charts the growing wage inequality in Britain over the past four decades: a rapid widening at both ends of the distribution in the 1980s; a more muted increase during the 1990s; and then in the 2000s, some improvement for the lowest paid, especially for women, and a renewed surge at the top. The evidence shows the wage distribution has been characterized by long-run growth in the relative demand for skills driven by technology change (rather than trade), and that changes in skill supply and institutional changes have affected the timing of how skill- and task-biased technical change impact upon the wage structure in different contexts.

This chapter studies wage inequality in the UK, which has risen significantly since the late 1970s. It first describes the patterns of change and trends in wage structures, and then explains why these changes have occurred. It emphasizes that there have been different episodes of changes in wage inequalities. The chapter also argues that the standard supply-demand model of the labour market is successful in accounting for some, but not all, of these observed changes.

This chapter examines the role played by the contract of employment in wage distribution and income inequality, distinguishing between the ordinary entitlement to ‘labour income’ and the finance-derived entitlement to ‘capital income’ linked to share value. The chapter aims to expose the interplay between contract and status in the quantification of income, a differentiation that may be seen as a reinvention of the old divides associated with the master-servant regime. Senior corporate managers, as quasi-partners in the firm, are able to access the residual profit of the firm through bonuses and stock options while most employees are entitled only to a fixed-rate wage. The chapter draws upon insights from corporate law to theorize not only the inequalities between different kinds of employment status but also the way in which those inequalities have been masked by a habit of regarding the contract of employment as a basically homogenous contract-type.

This introductory chapter sets out the book's purpose, namely to discuss the performance of the labour market in the United Kingdom in the recession period of 2008–9. It also notes the rapid growth of wage inequality in the UK and the variation of job prospects based on education, region, age, gender, and ethnicity. It reports that despite the expansion of inequality, about half a million children were raised from poverty during the decade following the 1997 labour government.