Working Papers
Minimum Wages, Labor Market Institutions, and the Distribution of Earnings in Iran
No.
1478
Publisher
ERF
Date
August, 2021
Topic
J5. Labor–Management Relations, Trade Unions, and Collective Bargaining
D3. Distribution
J4. Particular Labor Markets
J3. Wages, Compensation, and Labor Costs
We examine the impact of minimum wages on the distribution of earnings in Iran. Specifically, we show that minimum wages have played a critical role in the distribution of earnings and the distribution of household income. We identify a perverse relationship between minimum wages and distribution of earnings, which is contrary to the observed relationships in other developed and developing countries. To explain this anomaly, we investigate the role of minimum wages in the overall wage-setting institutions in the country and conduct decomposition analysis by reweighting methods that separate the effect of individual attributes from wage structure effects. The paper concludes by highlighting some of the broader implications of our findings for future research on inflation, unemployment and competitiveness in oil economies like Iran.
Research Fellows
Massoud Karshenas
Emeritus Professor of Economics, Department of Economics,...