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Minimum Wages and the Wage Structure in Mexico

Author

Listed:
  • David Fairris
  • Gurleen Popli
  • Eduardo Zepeda

Abstract

Instead of merely setting a lower bound on the wages of formal sector workers, minimum wages serve as a norm for wage setting more generally throughout the Mexican economy. Our results suggest that wages are commonly set at multiples of the minimum wage, and that changes in minimum wages influence wage changes across the occupational distribution. Moreover, our findings suggest that these normative features of minimum wages have their greatest impact on the mid-to-lower tail of the wage distribution, including the informal sector of the economy. Thus, the results lend support to the view that declining real minimum wages and stabilization programs that strengthened the link between wage levels, wage changes, and minimum wages, might account for a portion of the growing wage inequality in Mexico over the period of the late 1980s and early 1990s.

Suggested Citation

  • David Fairris & Gurleen Popli & Eduardo Zepeda, 2008. "Minimum Wages and the Wage Structure in Mexico," Review of Social Economy, Taylor & Francis Journals, vol. 66(2), pages 181-208.
  • Handle: RePEc:taf:rsocec:v:66:y:2008:i:2:p:181-208
    DOI: 10.1080/00346760701691489
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    Citations

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    Cited by:

    1. 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.
    2. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9241-z is not listed on IDEAS
    3. Bosch, Mariano & Manacorda, Marco, 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.
    4. Raymundo M. Campos-Vazquez & Nora Lustig, 2017. "Labour income inequality in Mexico: Puzzles solved and unsolved," WIDER Working Paper Series 186, World Institute for Development Economic Research (UNU-WIDER).
    5. Raymundo M. Campos-Vázquez, 2013. "Why did wage inequality decrease in Mexico after NAFTA?," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 245-278, July-Dece.
    6. Gurleen K. Popli, 2011. "Changes in Human Capital and Wage Inequality in Mexico," Oxford Development Studies, Taylor & Francis Journals, vol. 39(3), pages 369-387, February.
    7. repec:spr:ijlaec:v:60:y:2017:i:1:d:10.1007_s41027-017-0077-0 is not listed on IDEAS
    8. Margherita Comola & Luiz de Mello, 2009. "How Does Decentralised Minimum-Wage Setting Affect Unemployment and Informality?: The Case of Indonesia," OECD Economics Department Working Papers 710, OECD Publishing.
    9. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
    10. Crôtte, Amado & Noland, Robert B. & Graham, Daniel J., 2009. "Is the Mexico City metro an inferior good?," Transport Policy, Elsevier, vol. 16(1), pages 40-45, January.
    11. repec:unu:wpaper:wp2012-10 is not listed on IDEAS
    12. Fairris, David & Jonasson, Erik, 2016. "Determinants of Changing Informal Employment in Brazil, 2000–2010," MPRA Paper 71475, University Library of Munich, Germany.
    13. Eduardo Zepeda & Diana Alarcón & Fabio Veras Soares & Rafael Guerreiro Osorio, 2009. "Changes in Earnings in Brazil, Chile, and Mexico: Disentangling the Forces Behind Pro-Poor Change in Labour Markets," Working Papers 51, International Policy Centre for Inclusive Growth.
    14. Juárez González Laura & Casarín de la Cabada Daniel, 2016. "Downward Wage Rigidities in the Mexican Labor Market 1996-2011," Working Papers 2016-23, Banco de México.

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