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Minimum Wages, Globalization, and Poverty in Honduras

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  • Gindling, T.H.
  • Terrell, Katherine

Abstract

Summary We test whether minimum wage legislation is an effective poverty reduction tool in a poor country trying to stay competitive in the global economy. In Honduras, increases in relatively high minimum wages lead to reductions in poverty, especially extreme poverty. However, the impact is felt only in households with workers in large firms and felt more strongly among those with low wage workers. Increases in the minimum do not affect poverty in sectors where minimum wages are not enforced or do not apply. Hence minimum wages can be a poverty reduction tool in the formal sector, which competes globally.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 38 (2010)
Issue (Month): 6 (June)
Pages: 908-918

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Handle: RePEc:eee:wdevel:v:38:y:2010:i:6:p:908-918

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: minimum wages poverty Central America Honduras;

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References

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Citations

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Cited by:
  1. Jose Antonio Cordero, 2009. "Honduras: Recent Economic Performance," CEPR Reports and Issue Briefs 2009-42, Center for Economic and Policy Research (CEPR).
  2. Danziger, Leif, 2009. "Noncompliance and the Effects of the Minimum Wage on Hours and Welfare in Competitive Labor Markets," IZA Discussion Papers 4408, Institute for the Study of Labor (IZA).
  3. Alaniz, Enrique & Gindling, T.H. & Terrell, Katherine, 2011. "The impact of minimum wages on wages, work and poverty in Nicaragua," Labour Economics, Elsevier, vol. 18(S1), pages S45-S59.
  4. Basu, Arnab K. & Chau, Nancy & Kanbur, Ravi, 2007. "Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws," IZA Discussion Papers 2998, Institute for the Study of Labor (IZA).
  5. Basu, Arnab K. & Chau, Nancy & Siddique, Zahra, 2011. "Tax Evasion, Minimum Wage Non-Compliance and Informality," IZA Discussion Papers 6228, Institute for the Study of Labor (IZA).
  6. Kapelyuk Sergey, 2014. "Impact of minimum wage on income distribution and poverty in Russia," EERC Working Paper Series 14/03e, EERC Research Network, Russia and CIS.
  7. Basu, Arnab K. & Chau, Nancy & Kanbur, Ravi, 2011. "Contractual Dualism, Market Power and Informality," IZA Discussion Papers 5845, Institute for the Study of Labor (IZA).
  8. World Bank, 2012. "Better Jobs in Central America : The Role of Human Capital," World Bank Other Operational Studies 11924, The World Bank.
  9. Pauw, Karl & Leibbrandt, Murray, 2012. "Minimum Wages and Household Poverty: General Equilibrium Macro–Micro Simulations for South Africa," World Development, Elsevier, vol. 40(4), pages 771-783.

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