The Impact on Inequality of Raising the Minimum Wage: Gap‐narrowing and Reranking Effects

Raising the minimum wage may reduce inequality by increasing the wages of low‐skill workers, but it may also increase inequality due to negative impacts on employment that produce wage losses. Using previous estimates of the elasticities of wages and employment to changes in the minimum wage in Colombia and Brazil, we show that the net impact on inequality of increasing the minimum wage may depend on the distributional weights used for inequality measurement. The results are obtained by decomposing the Gini index into reranking and gap‐narrowing effects. Inequality‐increasing reranking effects, which are associated with job losses, may dominate inequality‐decreasing gap‐narrowing effects, which are associated with wage gains, when high weights are placed on workers with low earnings. For standard distributional weights, however, the likely net impact is a reduction in wage inequality.     

The ‘isolated mass’ revisited: strikes in British coal mining

The authors examine how far inter-colliery variations in local strike activity in Britain between the Wars can be explained by the characteristics of their immediate localities highlighted by Kerr and Siegel's ‘isolated mass’ theory. A regression analysis suggests that some of the variables indicated by Kerr and Siegel did affect strike activity but only weakly. A contingency table analysis confirms that some of the Kerr-Siegel variables serve to define groups of collieries which experienced significantly different levels of strike activity. Whilst supporting many of the criticisms levelled at the Kerr-Siegel hypothesis, the authors conclude that the empirically based rejection of the hypothesis has been too emphatic.