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Minimum wages and wage structure in Mexico

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Author Info
Fairris, David
Popli, Gurleen
Zepeda, Eduardo

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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://mpra.ub.uni-muenchen.de/400/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 400.

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Date of creation: 2006
Date of revision: 2006
Handle: RePEc:pra:mprapa:400

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

Other versions of this item:

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. William F. Maloney & Jairo Nunez Mendez, 2003. "Measuring the Impact of Minimum Wages: Evidence from Latin America," NBER Working Papers 9800, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November. [Downloadable!] (restricted)
  3. Fortin, Nicole M & Lemieux, Thomas, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring. [Downloadable!] (restricted)
  4. James Heckman & Carmen Pages, 2003. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Working Papers 10129, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Zadia M. Feliciano, 1998. "Does the Minimum Wage Affect Employment in Mexico?," Eastern Economic Journal, Eastern Economic Association, vol. 24(2), pages 165-180, Spring. [Downloadable!]
  6. David Fairris, 2003. "Unions and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(3), pages 481-497, April. [Downloadable!] (restricted)
  7. Prasch, Robert E & Sheth, Falguni A, 1999. "The Economics and Ethics of Minimum Wage Legislation," Review of Social Economy, Taylor and Francis Journals, vol. 57(4), pages 466-87, December.
  8. Sara G. Castellanos & Rodrigo Garcia-Verdu & David S. Kaplan, 2004. "Nominal Wage Rigidities in Mexico: Evidence from Social Security Records," NBER Working Papers 10383, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Christopher Woodruff, 1999. "Inflation stabilization and the vanishing size-wage effect," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 53(1), pages 103-122, October.
  10. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier. [Downloadable!] (restricted)
  11. David Neumark & Mark Schweitzer & William Wascher, 2000. "The Effects of Minimum Wages Throughout the Wage Distribution," NBER Working Papers 7519, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S102-35, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Richard B. Freeman, 2009. "Labor Regulations, Unions, and Social Protection in Developing Countries: Market distortions or Efficient Institutions?," NBER Working Papers 14789, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Gurleen Popli, 2005. "Rising Wage Inequality in Mexico: Structural Reforms or Changing Labor Market Institutions?," Working Papers 2005016, The University of Sheffield, Department of Economics, revised Nov 2005. [Downloadable!]
  3. Popli, Gurleen, 2006. "The rising wage inequality in Mexico, 1984-2000: A distributional analysis," MPRA Paper 399, University Library of Munich, Germany, revised 2006. [Downloadable!]
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