Does minimum wage reduce income inequality? A cross-country evidence

Mohd Zaini Abd Karim ^[1] ; Chan Sok Gee ^[2] ; Sallahuddin Hassan ^[1]
1. [1] Northern University of Malaysia
  
  Northern University of Malaysia
  
  Malasia
2. [2] University of Malaya
  
  University of Malaya
  
  Malasia
Localización: Cuadernos de economía: Spanish Journal of Economics and Finance, ISSN 0210-0266, ISSN-e 2340-6704, Vol. 44, Nº. 124 (Enero - Abril 2021), 2021, págs. 50-57
Idioma: inglés
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Resumen
- In this study, the effects of minimum wage policies on income inequality are examined by looking at cross-country evidences. By estimating the panel data econometric model, the results show that there are insufficient evidences to support the hypothesis that a country with a minimum wage rate policy enjoys a significant reduction in income inequality. However, the results suggest that higher minimum wage rate reduces the inequality gap of countries that are involved. The policy implication arises from the results in that the mere presence of minimum wage policy does not have any bearing on income inequality in a country. However, the level of minimum wage rate must be high enough to have effect on reducing income inequality but low enough so as not to adversely affect employability in the country.