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Minimum Wages and the Wage Structure in Mexico

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Author Info

  • David Fairris
  • Gurleen Popli
  • Eduardo Zepeda

Abstract

Instead of merely setting a lower bound on the wages of formal sector workers, minimum wages serve as a norm for wage setting more generally throughout the Mexican economy. Our results suggest that wages are commonly set at multiples of the minimum wage, and that changes in minimum wages influence wage changes across the occupational distribution. Moreover, our findings suggest that these normative features of minimum wages have their greatest impact on the mid-to-lower tail of the wage distribution, including the informal sector of the economy. Thus, the results lend support to the view that declining real minimum wages and stabilization programs that strengthened the link between wage levels, wage changes, and minimum wages, might account for a portion of the growing wage inequality in Mexico over the period of the late 1980s and early 1990s.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00346760701691489
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Social Economy.

Volume (Year): 66 (2008)
Issue (Month): 2 ()
Pages: 181-208

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Handle: RePEc:taf:rsocec:v:66:y:2008:i:2:p:181-208

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Related research

Keywords: wage distributions; minimum wages; wage inequality; Mexico;

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Cited by:
  1. Eduardo Zepeda & Diana Alarcón & Fabio Veras Soares & Rafael Guerreiro Osorio, 2009. "Changes in Earnings in Brazil, Chile, and Mexico: Disentangling the Forces Behind Pro-Poor Change in Labour Markets," Working Papers 51, International Policy Centre for Inclusive Growth.
  2. Mariano Bosch & Marco Manacorda, 2010. "Minimum Wages and Earnings Inequality in Urban Mexico," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 128-49, October.
  3. Crôtte, Amado & Noland, Robert B. & Graham, Daniel J., 2009. "Is the Mexico City metro an inferior good?," Transport Policy, Elsevier, vol. 16(1), pages 40-45, January.
  4. Raymundo Campos & Gerado Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989-2010," Working Papers 1201, Tulane University, Department of Economics.
  5. 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.
  6. Margherita Comola & Luiz de Mello, 2009. "How Does Decentralised Minimum-Wage Setting Affect Unemployment and Informality?: The Case of Indonesia," OECD Economics Department Working Papers 710, OECD Publishing.

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