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Assessing the Possible Antipoverty Effects of Recent Rises in Age-Specific Minimum Wages in New Zealand

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  • Notes: Access to the data used in this study was provided by Statistics New Zealand under conditions designed to give effect to the security and confidentiality provisions of the Statistics Act 1975. Results presented in this study are the work of the authors, not Statistics New Zealand. The analysis in the paper reflects the authors' views and not those of Statistics New Zealand.

Tim Maloney, Economics Department, Auckland University of Technology, Private Bag 92006, Auckland 1142, New Zealand (tim.maloney@aut.ac.nz).

Abstract

Real minimum wages increased by nearly 33 percent for adults and 123 percent for teenagers in New Zealand between 1999 and 2008. Where fewer than 2 percent of workers were being paid a minimum wage at the outset of this sample period, more than 8 percent of adult workers and 60 percent of teenage workers were receiving hourly earnings close to the minimum wage by the end of this period. These policy changes provide a unique opportunity to estimate the effects of the minimum wage on poverty. Although minimum wage workers are more likely to live in the poorest households, they are relatively widely dispersed throughout the income distribution. This is particularly true of teenage minimum wage workers. Furthermore, low-income households often do not contain any working members. We estimate that a 10 percent increase in minimum wages, even without a loss in employment or hours of work, would lower the relative poverty rate by less than one-tenth of a percentage point.

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