Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272734 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16107
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We suggest that stabilizing the baseline income can make low-wage workers more tolerant towards high income earners. We present evidence of this attitude in the UK by exploiting the introduction of the National Minimum Wage (NMW), which institutionally sets a baseline pay reducing the risk of income losses and providing a clear reference point for British workers at the lower end of the income distribution. Based on data from the British Household Panel Survey (BHPS), we show that workers who benefited from the NMW program became relatively more tolerant of high incomes and more likely to support and vote for the Conservative Party. As far as tolerance for high incomes is related to tolerance of inequality, our results may suggest that people advocate for equality also because they fear income losses below a given reference point.
Subjects: 
reference point
loss aversion
minimum wage
redistribution
inequality
UK
JEL: 
H10
H53
D63
D69
Z1
Document Type: 
Working Paper

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