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The impact of the minimum wage on income and employment in Mexico

Author

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  • Campos, Raymundo M.
  • Esquivel, Gerardo
  • Santillán, Alma S.

Abstract

This article analyses the effects of a rise in the minimum wage on wages and employment in Mexico. The source of variation is the equalization in late 2012 of the minimum wage in two areas of the country. Using the National Occupation and Employment Survey (ENOE), econometric analyses are performed of cross-section and individual panel data. The results of the first indicate that, on average, the hourly wage in zone B rose by between 1.6% and 2.6% for workers overall and between 1.8% and 3.3% for wage workers. The panel analysis yields similar results. Although the cross-section analysis does not show an impact in terms of employment, the panel data indicate that the probability of being an informal (formal) worker falls (rises) among those affected by the wage rise policy.

Suggested Citation

  • Campos, Raymundo M. & Esquivel, Gerardo & Santillán, Alma S., 2017. "The impact of the minimum wage on income and employment in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
  • Handle: RePEc:ecr:col070:42667
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    File URL: http://repositorio.cepal.org/handle/11362/42667
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    References listed on IDEAS

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    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    2. Mariano Bosch & Marco Manacorda, 2010. "Minimum Wages and Earnings Inequality in Urban Mexico," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 128-149, October.
    3. Kaplan, David S. & Pérez Arce Novaro, Francisco, 2006. "El efecto de los salarios mínimos en los ingresos laborales de México," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(289), pages 139-173, enero-mar.
    4. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages 110-116, March.
    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 102-135, July.
    6. Neumark, David & Cunningham, Wendy & Siga, Lucas, 2006. "The effects of the minimum wage in Brazil on the distribution of family incomes: 1996-2001," Journal of Development Economics, Elsevier, vol. 80(1), pages 136-159, June.
    7. Gindling, T.H. & Terrell, Katherine, 2009. "Minimum wages, wages and employment in various sectors in Honduras," Labour Economics, Elsevier, vol. 16(3), pages 291-303, June.
    8. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    9. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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    Cited by:

    1. Campos Vázquez, Raymundo Miguel & Rodas Milián, James Alexis, 2020. "El efecto faro del salario mínimo en la estructura salarial: evidencias para México," El Trimestre Económico, Fondo de Cultura Económica, vol. 87(345), pages 51-97, enero-mar.

    More about this item

    Keywords

    SALARIO MINIMO; EMPLEO; INGRESOS; ANALISIS ECONOMICO; MODELOS ECONOMETRICOS; MINIMUM WAGE; EMPLOYMENT; INCOME; ECONOMIC ANALYSIS; ECONOMETRIC MODELS;

    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
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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