Abstract
This paper investigates the effects of an increase in minimum wages on wage inequality and gender pay gap in APEC economies using unbalanced economy-level panel data from 1990 to 2017. We estimate both linear and quadratic models of the effective minimum wage, while controlling for macroeconomic variables that could affect wage inequality as well as gender pay gap. The increase in the minimum wage has the effect of alleviating the wage inequality at the lower-tail of the wage distribution. The effect is much greater for women than for men, which contributes to reducing gender pay gap. On the other hand, the rise in the minimum wage does not affect the wage inequality at the upper-tail of the wage distribution for both women and men.
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