Minimum wages, wages and employment in various sectors in Honduras
This paper contributes to our understanding of the impact of minimum wages on labor markets of developing countries, where there are often multiple minimum wages and compliance is weak. We examine how changes in more than 22 minimum wages over 1990-2004 affect employment, unemployment and average wages of workers in different sectors, defined by coverage under the legislation. The evidence suggests that minimum wages are effectively enforced only in medium and large-scale firms, where a 1% increase in the minimum wage leads to an increase of 0.29% in the average wage and a relatively large reduction in employment of -Â 0.46%. We find that public sector wages emulate minimum wage trends but the higher cost of labor does not reduce employment there. There are no discernable effects of minimum wages on the wages of workers in small-firms or the self-employed; yet, higher minimum wages may create more unemployment. We conclude that (even under our upper bound estimate of the effect on the wages of workers) the total earnings of workers in the large-firm covered sector fall with higher minimum wages in Honduras, which warrants a policy dialogue on the structure and level of minimum wages.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S87-104, August.
- Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
- Sara lemos, 2004.
"The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil,"
Discussion Papers in Economics
04/8, Department of Economics, University of Leicester.
- Lemos, Sara, 2004. "The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil," IZA Discussion Papers 1089, Institute for the Study of Labor (IZA).
- Gindling, T.H. & Terrell, Katherine, 2007. "The effects of multiple minimum wages throughout the labor market: The case of Costa Rica," Labour Economics, Elsevier, vol. 14(3), pages 485-511, June.
- Lemos, Sara, 2009.
"Minimum wage effects in a developing country,"
Elsevier, vol. 16(2), pages 224-237, April.
- Claudio Montenegro & Carmen Pagés, 2005.
"Who Benefits from Labor Market Regulations? Chile 1960-1998,"
Central Banking, Analysis, and Economic Policies Book Series,
in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.), Labor Markets and Institutions, edition 1, volume 8, chapter 4, pages 077-114
Central Bank of Chile.
- Claudio E. Montenegro & Carmen Pagés, 2004. "Who Benefits from Labor Market Regulations? Chile, 1960-1998," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 401-434 National Bureau of Economic Research, Inc.
- Claudio Montenegro & Carmen Pages, 2003. "Who Benefits from Labor Market Regulations? Chile 1960-1998," NBER Working Papers 9850, National Bureau of Economic Research, Inc.
- Claudio E. Montenegro & Carmen Pages, 2003. "Who benefits from labor market regulations? Chile 1960-1998," Policy Research Working Paper Series 3143, The World Bank.
- Claudio Montenegro & Carmen Pagés-Serra, 2003. "Who Benefits from Labor Market Regulations? Chile 1960-1998," Research Department Publications 4345, Inter-American Development Bank, Research Department.
- David Neumark & Wendy Cunningham & Lucas Siga, 2004.
"The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996-2001,"
050627, University of California-Irvine, Department of Economics.
- 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.
- Mariano Bosch & Marco Manacorda, 2008.
"Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence,"
CEP Discussion Papers
dp0880, Centre for Economic Performance, LSE.
- Mariano Bosch & Marco Manacorda, 2008. "Minimum wages and earnings inequality in urban Mexico. Revisiting the evidence," LSE Research Online Documents on Economics 19561, London School of Economics and Political Science, LSE Library.
- William Maloney & Jairo Mendez, 2004.
"Measuring the Impact of Minimum Wages. Evidence from Latin America,"
in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130
National Bureau of Economic Research, Inc.
- 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.
- 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.
- Neumark, David & Wascher, William L., 2007.
"Minimum Wages and Employment,"
Foundations and Trends(R) in Microeconomics,
now publishers, vol. 3(1–2), pages 1-182, March.
- Kennan, J., 1995.
"The Elusive Effects of Minimum Wages,"
9512, Wisconsin Madison - Social Systems.
- Gilles Saint-Paul, 1994. "Do Labor Market Rigidities Fulfill Distributive Objectives?: Searching for the Virtues of the European Model," IMF Staff Papers, Palgrave Macmillan, vol. 41(4), pages 624-642, December.
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
- Mariano Bosch, 2006.
"Job Creation and Job Destruction in the Presence of Informal Labour Markets,"
CEP Discussion Papers
dp0761, Centre for Economic Performance, LSE.
- Mariano Bosch, 2006. "Job creation and job destruction in the presence of informal labour markets," LSE Research Online Documents on Economics 19785, London School of Economics and Political Science, LSE Library.
- 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.
- 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.
- Richard Blundell & Stephen Bond, 2000.
"GMM Estimation with persistent panel data: an application to production functions,"
Taylor & Francis Journals, vol. 19(3), pages 321-340.
- Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
- Pablo Fajnzylber, 2001. "Minimum Wage Effects Throughout the Wage Distribution: Evidence from Brazil's Formal and Informal Sectors," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting] 098, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Kristensen, Nicolai & Cunningham, Wendy, 2006. "Do minimum wages in Latin America and the Caribbean matter ? Evidence from 19 countries," Policy Research Working Paper Series 3870, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:16:y:2009:i:3:p:291-303. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.