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The Impact of Minimum Wages in Mexico and Colombia

  • Bell, Linda A
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    Divergent trends in the real value of the minimum wage in Mexico and Colombia in the 1980s provide an opportunity for evaluating the impact of minimum wages on developing economies. Using panel data for each country, substantial disemployment effects of minimum wages are found in Colombia, where the impact is estimated at roughly 2-12 percent over the 1981-87 period. In Mexico, minimum wages have had no effect on wages or employment in the formal sector. The key explanation for the different impact is that the minimum wage is an effective wage in Colombia but not in Mexico. Copyright 1997 by University of Chicago Press.

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    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 15 (1997)
    Issue (Month): 3 (July)
    Pages: S102-35

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    Handle: RePEc:ucp:jlabec:v:15:y:1997:i:3:p:s102-35
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    1. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    2. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 1-34.
    3. Finis Welch, 1969. "Linear Synthesis of Skill Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 4(3), pages 311-327.
    4. Rosen, Sherwin, 1978. "Substitution and Division of Labour," Economica, London School of Economics and Political Science, vol. 45(179), pages 235-50, August.
    5. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May.
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