Does the Minimum Wage Affect Employment in Mexico?
This paper estimates the impact of a more than 50 percent reduction in the minimum to average wage ratio in Mexico between 1970 and 1990 using panel data on minimum wages in thirty-two Mexican states. Minimum wages are found to have little effect on male employment but a negative employment effect on females. Estimated elasticities are between -.58 and -1.25. Minimum wages do not affect employment of young males but have a small positive impact on the employment of older males, ages 55 to 64. This evidence suggests that increases in minimum wages shift demand away from less skilled workers towards relatively more skilled workers.
Volume (Year): 24 (1998)
Issue (Month): 2 (Spring)
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