The Impact of the Minimum Wage on Wage Distribution: The Evidence from Turkey

In this paper, we investigate the effect of the minimum wage on the entire wage distribution. More specifically, we address the issue of wage inequality by taking into account the potential distributional outcomes of the minimum wage legislation. We decompose the wage differences and the changes in the wage inequality before and after the sizeable minimum wage increase in 2004 following the methodology introduced by DiNardo, Fortin and Lemieux (1996). We use a non-parametric reweighting approach to decompose the effects of the minimum wage increase as well as other factors that may have changed the wage distribution. Our main findings confirm that the minimum wage has played the pivotal role in reducing wage inequality for both men and women wage earners between 2003 and 2005.