IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v209y2021ics0165176521004018.html
   My bibliography  Save this article

The effect of doubling the minimum wage on employment and earnings in Mexico

Author

Listed:
  • Campos-Vazquez, Raymundo M.
  • Esquivel, Gerardo

Abstract

In January 2019, Mexico doubled the minimum wage in municipalities that share a border with the United States. We use the universe of workers that were formally employed in the Mexican private sector in the third quarter of 2018 (19.6 million) and track their labor history from 2015Q1 through 2021Q1. Using a synthetic control approach, we find no significant effect on employment and a positive and significant impact on earnings, especially at the bottom of the wage distribution.

Suggested Citation

  • Campos-Vazquez, Raymundo M. & Esquivel, Gerardo, 2021. "The effect of doubling the minimum wage on employment and earnings in Mexico," Economics Letters, Elsevier, vol. 209(C).
    • Handle: RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521004018
    DOI: 10.1016/j.econlet.2021.110124
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176521004018
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2021.110124?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Eli Ben-Michael & Avi Feller & Jesse Rothstein, 2021. "The Augmented Synthetic Control Method," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1789-1803, October.
    2. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    3. Ekaterina Jardim & Mark C. Long & Robert Plotnick & Emma van Inwegen & Jacob Vigdor & Hilary Wething, 2018. "Minimum Wage Increases and Individual Employment Trajectories," NBER Working Papers 25182, National Bureau of Economic Research, Inc.
    4. Campos-Vazquez Raymundo M. & Delgado Victor & Rodas Alexis, 2020. "The effects of a place-based tax cut and minimum wage increase on labor market outcomes," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-24, March.
    5. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    6. Jeffrey Clemens & Lisa B. Kahn & Jonathan Meer, 2021. "Dropouts Need Not Apply? The Minimum Wage and Skill Upgrading," Journal of Labor Economics, University of Chicago Press, vol. 39(S1), pages 107-149.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Card, 2022. "Design-Based Research in Empirical Microeconomics," American Economic Review, American Economic Association, vol. 112(6), pages 1773-1781, June.
    2. Calderón, Mariana & Cortés, Josué & Pérez Pérez, Jorge & Salcedo, Alejandrina, 2023. "Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico," Labour Economics, Elsevier, vol. 80(C).
    3. Manuel Fernández & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gregory, Terry & Zierahn, Ulrich, 2022. "When the minimum wage really bites hard: The negative spillover effect on high-skilled workers," Journal of Public Economics, Elsevier, vol. 206(C).
    2. Dharmasankar, Sharada & Yoo, Hoyoung, 2023. "Assessing the main and spillover effects of Seattle's minimum wage on establishment decisions," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    3. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    4. Clemens, Jeffrey & Strain, Michael R., 2021. "The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-analysis Plan," IZA Discussion Papers 14747, Institute of Labor Economics (IZA).
    5. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    6. Dennis Shen & Peng Ding & Jasjeet Sekhon & Bin Yu, 2022. "Same Root Different Leaves: Time Series and Cross-Sectional Methods in Panel Data," Papers 2207.14481, arXiv.org, revised Oct 2022.
    7. Michael Funke & Kadri Männasoo & Helery Tasane, 2023. "Regional Economic Impacts of the Øresund Cross-Border Fixed Link: Cui Bono?," CESifo Working Paper Series 10557, CESifo.
    8. Arindrajit Dube & Attila Lindner, 2021. "City Limits: What Do Local-Area Minimum Wages Do?," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 27-50, Winter.
    9. Calderón, Mariana & Cortés, Josué & Pérez Pérez, Jorge & Salcedo, Alejandrina, 2023. "Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico," Labour Economics, Elsevier, vol. 80(C).
    10. Cooper, Daniel & Garga, Vaishali & Luengo-Prado, María José & Tang, Jenny, 2023. "The mitigating effect of masks on the spread of Covid-19," Economics & Human Biology, Elsevier, vol. 48(C).
    11. Girardi, Alessandro & Ventura, Marco, 2023. "The cost of waiting and the death toll in Italy during the first wave of the covid-19 pandemic," Health Policy, Elsevier, vol. 134(C).
    12. Stefano, Roberta di & Mellace, Giovanni, 2020. "The inclusive synthetic control method," Discussion Papers on Economics 14/2020, University of Southern Denmark, Department of Economics.
    13. Adams-Prassl, Abigail & Balgova, Maria & Qian, Matthias, 2020. "Flexible Work Arrangements in Low Wage Jobs: Evidence from Job Vacancy Data," IZA Discussion Papers 13691, Institute of Labor Economics (IZA).
    14. Florentin Kerschbaumer & Andreas Maschke, 2021. "The Implications of Monetary Union for Income Inequality: An Empirical Assessment," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 47(4), pages 537-574.
    15. Pestel, Nico & Bonin, Holger & Isphording, Ingo E. & Gregory, Terry & Caliendo, Marco, 2020. "Auswirkungen des gesetzlichen Mindestlohns auf Beschäftigung und Arbeitslosigkeit," IZA Research Reports 95, Institute of Labor Economics (IZA).
    16. Winters, John V., 2022. "Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas," IZA Discussion Papers 15499, Institute of Labor Economics (IZA).
    17. Drucker, Lev & Mazirov, Katya & Neumark, David, 2021. "Who pays for and who benefits from minimum wage increases? Evidence from Israeli tax data on business owners and workers," Journal of Public Economics, Elsevier, vol. 199(C).
    18. Erik Hurst & Patrick J. Kehoe & Elena Pastorino & Thomas Winberry, 2022. "The Distributional Impact of the Minimum Wage in the Short and Long Run," Staff Report 640, Federal Reserve Bank of Minneapolis.
    19. David Gilchrist & Thomas Emery & Nuno Garoupa & Rok Spruk, 2023. "Synthetic Control Method: A tool for comparative case studies in economic history," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 409-445, April.
    20. Roy Cerqueti & Raffaella Coppier & Alessandro Girardi & Marco Ventura, 2022. "The sooner the better: lives saved by the lockdown during the COVID-19 outbreak. The case of Italy [Using synthetic controls: Feasibility, data requirements, and methodological aspects]," The Econometrics Journal, Royal Economic Society, vol. 25(1), pages 46-70.

    More about this item

    Keywords

    Employment; Minimum wage; Mexico;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521004018. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.