One study looking at minimum wages on ridesharing apps in Indonesia highlights how effects on earnings might be muted if minimum wages lead to worker oversupply (Nakamura and Siregar, 2022).

There is also plenty of evidence of spillover effects amplifying the earnings effects of minimum wage hikes higher up into the wage distribution (David et al., 2016; Fortin et al., 2021; Cengiz et al., 2022). Firms keeping their relative position in the wage distribution is one commonly used argument of why spillovers arise. However, Forsythe (2022) provides a new data-oriented explanation. She shows spillovers arise within establishments and more specifically toward supervisors, who are likely the workers most aware of relative wage changes. Moreover, increasing supervisors’ wages is a way to maintain the career incentives for low-wage workers directly affected by the minimum wage rise. Another explanation of why spillovers arise relates to information frictions: Demir (2023) finds that the public announcement and discussion of a minimum wage in Germany led workers outside of the minimum wage sector to switch jobs and earn higher wages, likely as a result of having new information about their pay in possible outside options. Glasner (2023) also studies spillovers that occur in sectors not covered by minimum wage laws: the self-employment and gig economy space in the United States. He finds an increase in the minimum wage increased workers’ participation in these non-covered spaces, particularly in places with active Uber marketplaces.

In LMICs, as in developed ones, there is evidence of minimum wage having wage spillovers on wages higher up in the distribution (Engbom and Moser, 2022). There is also evidence of spillovers on informal sector wages, the so-called _lighthouse effect_ (Betcherman, 2012a). P ́erez (2020) finds that wage increases follow the minimum wage on both formal and to a lower extent informal wages. Increases are smaller than those implied by full compliance but they are positive for some unaffected workers, providing further evidence of the existence of spillover effects.

Despite spillover effects, the minimum wage reduces inequality in the lower tail of the wage distribution, since this is where wage increases are the most salient (David et al., 2016). Federal minimum wages are also linked with spatial wage convergence, particularly in the left tail of the distribution (Ahlfeldt et al., 2018). Furthermore, evidence on the effects of minimum wage suggests that wage compression increases within affected establishments, with particular compression in the top half of the wage distribution (Forsythe, 2022), following spillover effects toward supervisory wages. There is also evidence the minimum wage reduces the gender wage gap (Caliendo and Wittbrodt, 2022), including among the youngest workers (Majchrowska and Strawi ́nski, 2018). There is evidence across LMICs that the minimum wage reduces wage inequality (Betcherman, 2012a). Engbom and Moser (2022) find that the increase in the Brazilian minimum wage during between the late 1990s and late 2010s accounts for 45% of the decline in earnings inequality in the country. Haanwinckel (2020) uses a different methodology (i.e. a structural model) to reach the conclusion that the minimum wage is the main contributor to the decline in inequality observed in Brazil over a similar period of study (1998–2012). In line with this evidence, the decline in the Mexican real minimum wage has been found to increase the 10/50 wage percentile difference by 1.4%–1.6% annually (Belman and Wolfson, 2016). However, there are instances where a minimum wage increase might not lead to a reduction in wage inequality. Leckcivilize (2015) finds that given 40