Association for Public Policy Analysis & Management

Over recent years there has been a growing focus on the underlying inequity of Ireland’s direct income distribution. A consequence of this has been a recognition that policy should focus not just on the redistribution of income, but also on its predistribution. This paper reflects that perspective by exploring the effects of an increase in the minimum wage; where that wage rises to a level equivalent to two-thirds of median hourly earnings by 2020. Such an increase would raise the hourly earnings of almost one-third of employees. The analysis uses data from a nationally representative income survey, the 2013 Survey on Income and Living Conditions (SILC), to model the effects of this increase. In doing so it draws on the research literature to incorporate the various spillover and employment effects that are likely to be associated with such a change. The results of the analysis highlight the nominal increase in hourly earnings across all employees and its impact by gender, employment sector and age group. The paper also considers the impact of these increases on the inequity of the earnings distribution and analyses where in the income distribution these effects are experienced.