Wage reforms and equality gains: evidence from Greece

This paper examines whether minimum wage reforms affect income inequality among low-wage workers. We construct a novel “within-occupation” measure of wage dispersion, using a Greek dataset between 2010 and 2020. Using modern difference-in-differences analysis for causal inference, our findings show non-symmetrical effects on wage dispersion when a minimum wage reform is imposed. In particular, the minimum wage cut of 2012 did not alter the wage dispersion of low-wage workers, while the minimum wage increase of 2019 led to a decrease in wage inequality at the bottom segment of the labor market. Our paper equips policymakers with a solid understanding of the effects of minimum wage reforms on wage inequality and highlights the important role of wage rigidities in shaping these effects.