The minimum wage and inequality: The effects of education and technology

Zsófia L. Bárány*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract (may include machine translation)

In the past 30 years, wage inequality has increased steeply while real minimum wages have fallen. This paper demonstrates that a general equilibrium model with endogenous skill choice is required to correctly evaluate the implications of minimum wage changes.The minimum wage not only truncates the wage distribution but also affects skill prices and therefore changes the incentives that people face when making educational decisions. The calibrated model suggests-in line with recent empirical literature-that even though minimum wages affect the bottom end of the wage distribution more, their impact on the top end is significant as well.

Original languageEnglish
Pages (from-to)237-274
Number of pages38
JournalJournal of Labor Economics
Volume34
Issue number1
DOIs
StatePublished - 2016
Externally publishedYes

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