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Minimum Wages, Inequality and Globalization

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  • Gindling, T. H.

    ()
    (University of Maryland, Baltimore County)

  • Terrell, Katherine

    (University of Michigan)

Abstract

This paper contributes to our understanding of the impact of institutions on incomes of workers in developing countries by rigorously addressing the question as to whether changes in minimum wages can change the inequality of the distribution of earnings. More specifically, we analyze whether changes in Costa Rica’s complex institution of multiple minimum wages in the 1980s and 1990s acted as a countervailing force to the unequalizing effect of globalization. Using annual data on workers from the 1987-1997 household surveys, it is shown that changes in the legal minimum wages did indeed have an effect on wage inequality and that these changes would not have been captured using the simple interpretation of minimum wages found in much of the literature.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1160.

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Length: 29 pages
Date of creation: May 2004
Date of revision:
Publication status: published in: Michigan Journal of International Law, 2004, 26(1), 245-269
Handle: RePEc:iza:izadps:dp1160

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Keywords: wages; employment; minimum wages; Costa Rica;

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References

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  1. Robbins, Donald & Gindling, T H, 1999. "Trade Liberalization and the Relative Wages for More-Skilled Workers in Costa Rica," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 3(2), pages 140-54, June.
  2. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1245-1279, November.
  3. Gindling, T. H. & Robbins, Donald, 2001. "Patterns and Sources of Changing Wage Inequality in Chile and Costa Rica During Structural Adjustment," World Development, Elsevier, Elsevier, vol. 29(4), pages 725-745, April.
  4. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 20(4), pages 733-783, October.
  5. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc.
  6. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 15(3), pages S102-35, July.
  7. Cortez, Willy W., 2001. "What is Behind Increasing Wage Inequality in Mexico?," World Development, Elsevier, Elsevier, vol. 29(11), pages 1905-1922, November.
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Citations

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Cited by:
  1. Gindling, T.H. & Terrell, Katherine, 2007. "The effects of multiple minimum wages throughout the labor market: The case of Costa Rica," Labour Economics, Elsevier, Elsevier, vol. 14(3), pages 485-511, June.
  2. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
  3. TH Gindling & Juan Diego Trejos, 2005. "Accounting for Changing Earnings Inequality in Costa Rica, 1980-99," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 898-926.

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