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

Listed author(s):
  • Bosch, Mariano
  • Manacorda, Marco

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.

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File URL: http://eprints.lse.ac.uk/19561/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19561.

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Length: 62 pages
Date of creation: Jul 2008
Handle: RePEc:ehl:lserod:19561
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