Minimum wage and tolerance for high incomes

Fazio, Andrea and Reggiani, Tommaso ORCID: https://orcid.org/0000-0002-3134-1049 2023. Minimum wage and tolerance for high incomes. European Economic Review 155 , 104445. 10.1016/j.euroecorev.2023.104445

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Abstract

We suggest that stabilizing the baseline income can make low-wage workers more tolerant towards high income earners. We present evidence of this attitude in the UK by exploiting the introduction of the National Minimum Wage (NMW), which institutionally sets a baseline pay reducing the risk of income losses and providing a clear reference point for British workers at the lower end of the income distribution. Based on data from the British Household Panel Survey (BHPS), we show that workers who benefited from the NMW program became relatively more tolerant of high incomes and more likely to support and vote for the Conservative Party. As far as tolerance for high incomes is related to tolerance of inequality, our results may suggest that people advocate for equality also because they fear income losses below a given reference point.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Uncontrolled Keywords:	Inequality, Redistribution, Minimum wage, Loss aversion, Reference Point, UK.
Publisher:	Elsevier
ISSN:	0014-2921
Funders:	GACR (Czechia - GA20-06785S), InGRID-2 (# 730998)
Date of First Compliant Deposit:	2 May 2023
Date of Acceptance:	28 March 2023
Last Modified:	02 Jun 2023 05:50
URI:	https://orca.cardiff.ac.uk/id/eprint/159112

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