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Minimum wages and wage structure in Mexico

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Author Info

  • Fairris, David
  • Popli, Gurleen
  • Zepeda, Eduardo

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

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References

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  1. 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.
  2. Robert Prasch & Falguni Sheth, 1999. "The Economics and Ethics of Minimum Wage Legislation," Review of Social Economy, Taylor & Francis Journals, vol. 57(4), pages 466-487.
  3. Christopher Woodruff, 1999. "Inflation stabilization and the vanishing size-wage effect," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(1), pages 103-122, October.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
  11. Nicole M. Fortin & Thomas Lemieux, 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.
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Citations

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Cited by:
  1. Gerardo Esquivel, 2010. "The dynamics of income inequality in Mexico since NAFTA," Serie documentos de trabajo del Centro de Estudios Económicos 2010-09, El Colegio de México, Centro de Estudios Económicos.
  2. Popli, Gurleen, 2006. "The rising wage inequality in Mexico, 1984-2000: A distributional analysis," MPRA Paper 399, University Library of Munich, Germany, revised 2006.
  3. 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.
  4. 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.

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