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Minimum wages and earnings inequality in urban Mexico. Revisiting the evidence

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  • Bosch, Mariano
  • Manacorda, Marco

Abstract

This paper explores the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980 and the late 1990s. In contrast to the view that sees minimum wages as an ineffective redistributive tool in developing countries, we find that the deterioration in the real bite of the minimum wage is responsible for the entire rise in inequality at the bottom of the distribution. Our result challenges the widespread perception that trade induced shocks are the single most important factor behind the recent rise in earnings inequality in several less developed economies.

Suggested Citation

  • 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.
  • Handle: RePEc:ehl:lserod:19561
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    References listed on IDEAS

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    1. repec:lrc:lareco:v:5:y:2017:i:3:p:26-30 is not listed on IDEAS
    2. 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.
    3. Chiara Binelli & Orazio Attanasio, 2010. "Mexico in the 1990s: the Main Cross-Sectional Facts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 238-264, January.
    4. Sell, Friedrich L. & Öllinger, Michael, 2017. "On the distributional effects of minimum wages: A note," Working Papers in Economics 2017,3, Bundeswehr University Munich, Economic Research Group.

    More about this item

    Keywords

    Minimum Wage; Inequality; Informality; Mexico;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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