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Minimum Wage and Job Transitions in Mexico

Author

Listed:
  • Cabrera-Hernandez, Francisco

    (Department of Economics, Centro de Investigacion y Docencia Economicas)

  • Duval Hernández, Robert

    (Open University of Cyprus)

Abstract

This paper analyzes the labor market effects of Mexico's 2019 minimum wage reform, which doubled wages in northern border municipalities. Using other northern municipalities with smaller wage adjustments as a comparison group, we examine changes in worker transitions across employment states. The reform lowered quit rates among formally employed workers but increased them for certain informal workers. Although the wage hike did not raise overall layoffs, it altered their composition: laid-off formal workers became more likely to transition into informal employment, while new formal hires increasingly came from previously employed informal workers.

Suggested Citation

  • Cabrera-Hernandez, Francisco & Duval Hernández, Robert, 2026. "Minimum Wage and Job Transitions in Mexico," IZA Discussion Papers 18443, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18443
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    References listed on IDEAS

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    1. Campos-Vazquez, Raymundo M. & Esquivel, Gerardo, 2021. "The effect of doubling the minimum wage on employment and earnings in Mexico," Economics Letters, Elsevier, vol. 209(C).
    2. Decio Coviello & Erika Deserranno & Nicola Persico, 2022. "Minimum Wage and Individual Worker Productivity: Evidence from a Large US Retailer," Journal of Political Economy, University of Chicago Press, vol. 130(9), pages 2315-2360.
    3. Wursten, Jesse & Reich, Michael, 2023. "Racial inequality in frictional labor markets: Evidence from minimum wages," Labour Economics, Elsevier, vol. 82(C).
    4. Alvarado Pérez, René & Orraca Romano, Pedro Paulo & Cabrera-Hernández, Francisco, 2023. "El efecto de duplicar el salario mínimo en la brecha de género en empleo y salarios en México," El Trimestre Económico, Fondo de Cultura Económica, vol. 90(360), pages 961-999, octubre-d.
    5. Calderón, Mariana & Cortés, Josué & Pérez Pérez, Jorge & Salcedo, Alejandrina, 2023. "Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico," Labour Economics, Elsevier, vol. 80(C).
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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