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The Minimum Wage In Colombia1984-2001: Favoring The Middle Class With A Bite On The Poor

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  • CARLOS A. ARANGO

    ()

  • ANGÉLICA PACHÓN

    ()

Abstract

This paper exploits the long history of the minimum wage in Colombia in order to see whether it has im-proved the living conditions of low income families and reduced income inequality. This paper also ex-plores how the minimum wage may have distorted market outcomes in the process. We fi nd signifi cant negative minimum wage effects on both the likeli-hood of being employed and hours worked among household heads. The negative effect is strongest for women, the young and less educated people. For non-head household members, we fi nd that a rise in the minimum wage signifi cantly increases labor participation, reduces hours worked, and increases the likelihood of being unemployed. Most impor-tantly, we fi nd evidence that the minimum wage ends up being regressive, improving the living con-ditions of families in the middle and the upper parts of the income distribution but causing net losses for those at the bottom.

Suggested Citation

  • Carlos A. Arango & Angélica Pachón, 2007. "The Minimum Wage In Colombia1984-2001: Favoring The Middle Class With A Bite On The Poor," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(55), pages 148-193, December.
  • Handle: RePEc:col:000107:004649
    as

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    References listed on IDEAS

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    1. Lustig, N. & Mcleod, D., 1996. "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence," Papers 125, Brookings Institution - Working Papers.
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    Cited by:

    1. Juan José Echavarría & Enrique López & Sergio Ocampo, 2011. "Choques, instituciones laborales y desempleo en Colombia," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(66), pages 128-173, Diciembre.
    2. repec:eee:wdevel:v:102:y:2018:i:c:p:135-157 is not listed on IDEAS

    More about this item

    Keywords

    minimum wage; income distribution; income inequality; poverty alleviation.;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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