48 lines
2.5 KiB
YAML
48 lines
2.5 KiB
YAML
cite: Chao2022
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author: Chao, C.-C., Ee, M. S., Nguyen, X., & Yu, E. S. H.
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year: 2022
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title: "Minimum wage, firm dynamics, and wage inequality: Theory and evidence"
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publisher: International Journal Of Economic Theory
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uri: https://doi.org/10.1111/ijet.12307
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pubtype: article
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discipline: economics
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country: global
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period: 2005-2015
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maxlength:
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targeting:
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group: formal workers
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data: WB Doing Business Survey, WDI, ILOSTAT
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design: simulation
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method: dual economy general-equilibrium model
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sample: 43
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unit: country
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representativeness: national
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causal: 1 # 0 correlation / 1 causal
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theory: Harris & Todaro rural-urban migration model
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limitations: decreasing inequality through increased rural agricultural capital, while reasonable, has to be a prior assumption; short-term firm exit has to be omitted
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observation:
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- intervention: minimum wage
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institutional: 1
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structural: 0
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agency: 0
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inequality: income
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type: 0 # 0 vertical / 1 horizontal
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indicator: 1 # 0 absolute / 1 relative
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measures: Gini coeff
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findings: short-term reduction of skilled-unskilled wage gap but increased unemployment, decreased welfare; long-term increased wage equality and improved social welfare
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channels: firm exit from urban manufacturing increases capital to rural agricultural sector
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direction: -1
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significance: 2 # 0 nsg / 1 msg / 2 sg
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notes:
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annotation: |
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A study looking at the effects of minimum wage increases on a country's income inequality, looking at the impacts in a sample of 43 countries, both LMIC and HIC.
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Using a general-equilibrium model, it finds that there are differences between the short-term and long-term effects of the increase:
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In the short term it leads to a reduction of the skilled-unskilled wage gap, however an increase in unemployment and welfare,
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while in the long term the results are an overall decrease in wage inequality as well as improved social welfare.
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It finds those results primarily stem from LMIC which experience significant effects driven by a long-term firm exit from the urban manufacturing sector thereby increasing available capital for the rural agricultural sector, while in HIC the results remain insignificant.
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The study uses the Gini coefficient for identifying a country's inequality.
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Some limitations of the study include the necessity to omit short-term urban firm exit for the impact to be significant, as well as requiring the, reasonable but necessary, prior assumption of decreased inequality through increased rural agricultural capital.
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