author: Alinaghi, N., Creedy, J., & Gemmell, N. year: 2020 title: "The redistributive effects of a minimum wage increase in New Zealand: A microsimulation analysis" publisher: Australian Economic Review uri: https://doi.org/10.1111/1467-8462.12381 pubtype: article discipline: economics country: New Zealand period: 2012-2013 maxlength: targeting: implicit group: data: New Zealand Household Economic Survey (HES) design: simulation method: microsimulation model; uses Atkinson index sample: 3500 unit: individual representativeness: national causal: 0 # 0 correlation / 1 causal theory: limitations: large sample weights may bias specific groups, e.g. sole parents observation: - intervention: minimum wage institutional: 1 structural: 1 agency: 0 inequality: income type: 0 # 0 vertical / 1 horizontal indicator: 1 # 0 absolute / 1 relative measures: Atkinson index findings: small impact on inequality of income signals bad programme targeting; significant reduction in poverty measures for sole parents already in employment only, but insignificant for sole parents overall channels: many low-wage earners are secondary earners in higher income households; low-wage households often have no wage earners at all direction: -1 # -1 neg / 0 none / 1 pos significance: 0 # 0 nsg / 1 msg / 2 sg notes: annotation: | A study using a microsimulation to estimate the effects of a minimum wage increase in New Zealand on overall income inequality and further disaggregations along gender and poverty lines. It finds limited redistributional effects for the policy, with negligible impact on overall income inequality and the possibility of actually increasing inequalities among lower percentile income households. Additionally, while it finds a significant reduction in some poverty measures for sole parents that are in employment, when looking at sole parents overall the effects become insignificant again. The authors suggest this points to bad programme targeting, which at best has negligible positive impact on income equality and at worst worsens income inequality in lower income households, due to may low-wage earners being the secondary earners of higher-income households but low-wage households often having no wage earners at all. A pertinent limitation of the study includes its large sample weights possibly biasing the impacts on specific groups such as sole parents and thus being careful not to overestimate their significance.