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DT 26/21 - Distributive effects of a coordinated wage bargaining scheme

Using matched employer-employee administrative data from Uruguay, we analyze the distributive effects of a wage policy with a national minimum wage and more than two hundred sectoral minimum wages. This wage policy reduces inequality in the lower tail of the wage distribution for all formal private workers, mainly among males, and during a most favorable macroeconomic context. For males, we find spillovers affecting the upper end. Exploring job mechanisms: a smaller distributive effect aligns with a higher displacement effect within sectors in the bottom distribution and among the more affected sectors, but no evidence is found in total employment performance.

 
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