The effects of the 2000-20001 minimum-wage rise on income distribution
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The statutory minimum wage in Hungary rose by 57 per cent in 2001 and 25 per cent in 2002. Previous work on the effects has concentrated mainly on employment rather than redistributive aspects. This study examines where those affected by the increases are located in the income-distribution structure and how their positions have changed with the rises in the minimum wage. It was found that more than a half belong to the upper three income quintiles, so that minimum-wage earners cannot be identified with the poor, although the calculations showed that the majority appeared indeed to earn the minimum wage. The increases had a positive effect on the incomes of minimum wage earners, especially those in poorer households. The losers by the increases were those in the topmost income quintile and those made redundant, most of the latter being poor.
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