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Measuring the Impact of Minimum Wages: Evidence from Latin America

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  • William F. Maloney
  • Jairo Nunez Mendez

Abstract

This paper first provides an overview of the levels of minimum wages in Latin America and their true impact on the distribution of wages using both numerical measures and kernel density plots. It identifies numeraire' effects higher in the wage distribution and lighthouse' or reference effects in the unregulated or informal' sector. The final section then employs panel employment data from Colombia, a country where minimum wages seem high and very binding, to quantify the effects of an increase on wages and employment. The evidence suggests that in the Latin American context, the minimum wage has impacts beyond those usually contemplated in the advanced country literature.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9800.

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Date of creation: Jun 2003
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Publication status: published as William Maloney, Jairo Mendez. "Measuring the Impact of Minimum Wages. Evidence from Latin America," in James J. Heckman and Carmen Pagés, editors, "Law and Employment: Lessons from Latin America and the Caribbean" University of Chicago Press (2004)
Handle: RePEc:nbr:nberwo:9800

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  1. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
  2. Fugazza, Marco & Fiess, Norbert M. & Maloney, William, 2002. "Exchange rate appreciations, labor market rigidities, and informality," Policy Research Working Paper Series 2771, The World Bank.
  3. Agenor, Pierre-Richard & Aizenman, Joshua, 1999. "Macroeconomic adjustment with segmented labor markets," Journal of Development Economics, Elsevier, vol. 58(2), pages 277-296, April.
  4. Cunningham, Wendy V & Maloney, William F, 2001. "Heterogeneity among Mexico's Microenterprises: An Application of Factor and Cluster Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 50(1), pages 131-56, October.
  5. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
  6. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
  7. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1998. "Minimum Wages and Employment in France and the United States," Papiers du Laboratoire de Microéconomie Appliquée 1998-12, Université Panthéon-Sorbonne (Paris 1).
  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, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  9. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
  10. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
  11. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
  12. Fajnzylber, Pablo & Maloney, William F., 2001. "How comparable are labor demand elasticities across countries?," Policy Research Working Paper Series 2658, The World Bank.
  13. 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.
  14. Jean Baldwin Grossman, 1983. "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 359-378.
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