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Does the Minimum Wage Affect Employment in Mexico?

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  • Zadia M. Feliciano

    (Queens College)

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    Abstract

    This paper estimates the impact of a more than 50 percent reduction in the minimum to average wage ratio in Mexico between 1970 and 1990 using panel data on minimum wages in thirty-two Mexican states. Minimum wages are found to have little effect on male employment but a negative employment effect on females. Estimated elasticities are between -.58 and -1.25. Minimum wages do not affect employment of young males but have a small positive impact on the employment of older males, ages 55 to 64. This evidence suggests that increases in minimum wages shift demand away from less skilled workers towards relatively more skilled workers.

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    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume24/V24N2P165_180.pdf
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    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 24 (1998)
    Issue (Month): 2 (Spring)
    Pages: 165-180

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    Handle: RePEc:eej:eeconj:v:24:y:1998:i:2:p:165-180

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    Web page: http://www.ramapo.edu/eea/journal.html
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    Related research

    Keywords: Employment; Minimum Wage; Wage;

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    Cited by:
    1. Pierre, Gaelle & Scarpetta, Stefano, 2004. "Employment regulations through the eyes of employers - do they matter and how do firms respond to them?," Policy Research Working Paper Series 3463, The World Bank.
    2. Mariano Bosch & Marco Manacorda, 2008. "Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence," CEP Discussion Papers dp0880, Centre for Economic Performance, LSE.
    3. Gordon H. Hanson, 2003. "What Has Happened to Wages in Mexico since NAFTA?," NBER Working Papers 9563, National Bureau of Economic Research, Inc.
    4. World Bank, 2000. "Mexico : Earnings Inequality after Mexico's Economic and Educational Reforms, Volume 1. Main Document," World Bank Other Operational Studies 15263, The World Bank.
    5. Lemos, Sara, 2004. "The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil," IZA Discussion Papers 1089, Institute for the Study of Labor (IZA).
    6. Betcherman, Gordon, 2014. "Labor market regulations : what do we know about their impacts in developing countries ?," Policy Research Working Paper Series 6819, The World Bank.
    7. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    8. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier.
    9. Fairris, David & Popli, Gurleen & Zepeda, Eduardo, 2006. "Minimum wages and wage structure in Mexico," MPRA Paper 400, University Library of Munich, Germany, revised 2006.
    10. Rubery, Jill, 2003. "Pay equity, minimum wage and equality at work," ILO Working Papers 366872, International Labour Organization.
    11. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," Working Papers 060708, University of California-Irvine, Department of Economics, revised Jan 2007.
    12. Fang, Tony & Lin, Carl, 2013. "Minimum Wages and Employment in China," IZA Discussion Papers 7813, Institute for the Study of Labor (IZA).

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