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Minimum Wages in Colombia: Holding the Middle with a Bite

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Author Info
Carlos Arango ()
Angélica Pachón ()
Abstract

This paper exploits the long history of the minimum wage in a relatively stable developing economy like Colombia in order to see whether it may alleviate the living conditions of low income families and reduce income inequality. The paper does not only explore how the minimum wage may serve these purposes, but also how it may distort market outcomes to do so. We found significant negative minimum wage effects on both the likelihood of being employed and hours worked for all family members, being it stronger for women, and the young and less educated people. We also found a positive effect on non-head participation especially in families with low human capital. But, more important, we found evidence that the minimum wage ends up being regressive, improving the living conditions of families in the middle and the upper part of the income distribution with net losses for those at the bottom.

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Paper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number 003224.

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Length: 41
Date of creation: 31 Mar 2004
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Handle: RePEc:col:000094:003224

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  1. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 277-97, April. [Downloadable!] (restricted)
  2. Maloney, William F. & Nunez, Jairo & Cunningham, Wendy & Fiess, Norbert & Montenegro, Claudio & Murrugarra, Edmundo & Santamaria,Mauricio & Sepulveda, Claudia, 2001. "Measuring the impact of minimum wages : evidence from Latin America," Policy Research Working Paper Series 2597, The World Bank. [Downloadable!]
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  3. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-49, May. [Downloadable!] (restricted)
  4. Alida Castillo Freeman & Richard B. Freeman, 1991. "Minimum Wages in Puerto Rico: Textbook Case of a Wage Floor?," NBER Working Papers 3759, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Robertson, D & Symons, J, 1992. "Some Strange Properties of Panel Data Estimators," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(2), pages 175-89, April-Jun. [Downloadable!] (restricted)
  6. Azam, Jean-Paul, 1997. "Efficiency Wage and the Family: An Explanation for the Impact of the Agricultural Minimum Wage in Morocco," Kyklos, Blackwell Publishing, vol. 50(3), pages 369-82.
  7. Richard V. Burkhauser & Kenneth A. Couch & David C. Wittenburg, 2000. "Who Minimum Wage Increases Bite: An Analysis Using Monthly Data from the SIPP and the CPS," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 16-40, July.
  8. Gonzaga, Gustavo & Camargo, José Márcio & Neri, Marcelo Cortes, 2000. "Efeitos Informais Do Salário Mínimo E Pobreza," Economics Working Papers (Ensaios Economicos da EPGE) 372, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  9. Card, David & Krueger, Alan B, 1995. "Time-Series Minimum-Wage Studies: A Meta-analysis," American Economic Review, American Economic Association, vol. 85(2), pages 238-43, May. [Downloadable!] (restricted)
  10. Pierre-Richard Agenor & Joshua Aizenman, 1994. "Macroeconomic Adjustment with Segmented Labor Markets," NBER Working Papers 4769, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September. [Downloadable!] (restricted)
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  1. A. Kugler, M. Kugler, 2008. "Labour Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia," Working Papers eg0056, Wilfrid Laurier University, Department of Economics, revised 2008. [Downloadable!]
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