Minimum Wage and Job Mobility
AbstractWe study the effects of the minimum wage in over employment and income by considering a monthly database that captures seven minimum wage changes registered between 2002 and 2011. We estimate that about 1 million workers have an income by main occupation in the neighbourhood of the minimum wage. We found that the minimum wage-income elasticity is statistically significant; the evidence also suggests that those who receive low incomes and those working in small businesses are the most affected by increases in the minimum wage. Employment effects are monotonically decreasing in absolute terms by firm size: moderate in big firms and higher in small firms. Results are robust when assessing the job-to-job transitions. Finally, we present evidence that supports the hypothesis that the minimum wage in Peru is correlated with income. The movement of income distribution in the context of changes in the minimum wage as well as the results provided by a model that captures the drivers of income justify this result.
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Bibliographic InfoPaper provided by Banco Central de Reserva del Perú in its series Working Papers with number 2013-012.
Date of creation: Aug 2013
Date of revision:
Minimum wage; Labor mobility; Income dynamics; Informality;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E26 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-06 (All new papers)
- NEP-IUE-2013-09-06 (Informal & Underground Economics)
- NEP-LAB-2013-09-06 (Labour Economics)
- NEP-LAM-2013-09-06 (Central & South America)
- NEP-LMA-2013-09-06 (Labor Markets - Supply, Demand, & Wages)
- NEP-LTV-2013-09-06 (Unemployment, Inequality & Poverty)
- NEP-MAC-2013-09-06 (Macroeconomics)
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