Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102347
Authors: 
Garnero, Andrea
Kampelmann, Stephan
Rycx, Francois
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8419
Abstract: 
This paper explores how the diversity of minimum wage systems affects earnings inequalities within European countries. It relies on the combination of (a) harmonized micro-data from household surveys, (b) data on national statutory minimum wages and coverage rates, and (c) hand-collected information on minimum rates from more than 1,100 sectoral-level agreements across Europe. The analysis covers 18 countries over the period 2007-2009. Empirical results confirm the intuition of many practitioners that the combination of sectoral minimum rates and high coverage of collective bargaining can, at least for earnings inequalities, be regarded as a functional equivalent to a binding statutory minimum wage at the national level. Regression results suggest indeed that both a national statutory minimum wage and, in countries with sectoral-level minima, a higher collective bargaining coverage are significantly associated with lower levels of (overall and inter-industry) wage inequalities and a smaller fraction of workers paid below prevailing minima. Several robustness checks confirm these findings.
Subjects: 
wage inequality
collective bargaining
minimum wage systems
Europe
JEL: 
J31
J33
J51
Document Type: 
Working Paper

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