The Czech Wage Distribution and the Minimum Wage Impacts: the Empirical Analysis

A well-fi tting wage distribution is a crucial precondition for economic modeling of the labour market processes.In the fi rst part, this paper provides the evidence that – as for wages in the Czech Republic – the most oft enused log-normal distribution failed and the best-fi tting one is the Dagum distribution. Th en we investigatethe role of wage distribution in the process of the economic modeling. By way of an example of the minimumwage impacts on the Czech labour market, we examine the response of Meyer and Wise’s (1983) model to theDagum and log-normal distributions. Th e results suggest that the wage distribution has important implicationsfor the eff ects of the minimum wage on the shape of the lower tail of the measured wage distribution andis thus an important feature for interpreting the eff ects of minimum wages.