1. Essays on Income Inequality: The Role of Institutions, Firms and Neighborhoods
- Author
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van Bezooijen, Emiel Florentijn Sebastiaan and van Bezooijen, Emiel Florentijn Sebastiaan
- Abstract
This dissertation consists of three empirical studies closely related to income inequality. The first study focuses on the minimum wage — an important labor market institution to address income inequality at the lower end of the wage distribution. I study the effect of a 15-19% increase in the Dutch age-specific minimum wage applicable to workers aged 20-22 on the employment outcomes and earnings of those affected age groups. I use a difference-in-differences research design to trace the impact of the minimum wage increase throughout the age-specific wage distribution. I show that the increase in the age-specific minimum wage raised the wages of workers aged 20-22 in low-paid jobs, without adversely affecting the number of jobs held and total hours worked by those workers. The second study focuses on firm wage-setting (i.e. monopsony) power, which allows firms to pay wages below the competitive market wage without losing a substantial share of their employees. This can have important consequences for income inequality if firms possess more wage-setting power over certain groups of workers or when certain groups of workers are disproportionately employed in industries or occupations characterized by a higher degree of firm wage-setting power. I quantify the degree of firm wage-setting power in the Dutch labor market by estimating labor supply elasticities to firms, using a matched event-study research design. In addition, I explore whether firm wage-setting power varies across industries and different groups of workers. I find that in the Dutch labor market as a whole, firms can potentially pay wages 12% below the competitive market wage. Moreover, I find that firms possess more wage-setting power over women compared to men, potentially contributing to the gender wage gap. Additionally, firms have relatively high wage-setting power over the lowest- and highest-paid workers. The third study focuses on the relationship between the characteristics of the neighborhood in
- Published
- 2024