Impact of Minimum Wage Policy on Income Inequality: Azerbaijan Case

Abstract

The effects of the minimum wage on income inequality in households were assessed in the article, by using the differences-in-differences method. The authors claim that since the minimum wage in Azerbaijan is much lower than the average wage, as well as because the number of waged (and salaried) employees has a small share in the total employment, the impact of the minimum wage on the total income of households is not felt. However, such an effect can be observed in the income inequality of low-income families. The authors suggest that the minimum wage should be closer to the average wage and the level of self-employment in the country should decrease. This can lead to a reduction in income inequality between households.