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Evidence of the Impacts of Minimum Wage on Labor Market Outcomes: The Case of Bolivia

Author

Listed:
  • Marcelo Nicolas Claure Ramirez
  • Alejandra Leyton
  • Christian Valencia
  • Karenth Vanessa Sanchez Bohrquez
  • Jorge Davalos

Abstract

Economic theory suggests that minimum wages may lead to unemployment; nevertheless, empirical evidence in developed economies stays ambiguous. Evidence from developing countries is even more heterogenous due to the low law enforcement and weaker labor market institutions. Thus, our aim is to assess the impact of minimum wage increases on labor market outcomes in Bolivia, a country characterized by weak law compliance and high informality. Our identification strategy exploits differences in exposure to minimum wage increases across subsets of population for the period 2006-2013. Our results show positive and significant effects over real wages for men with no effects on employment, informalization or hours worked. Furthermore, we find evidence of gender discrimination since women are prone to suffer unemployment and informalization while not benefiting from higher real wages as men do.

Suggested Citation

  • Marcelo Nicolas Claure Ramirez & Alejandra Leyton & Christian Valencia & Karenth Vanessa Sanchez Bohrquez & Jorge Davalos, 2017. "Evidence of the Impacts of Minimum Wage on Labor Market Outcomes: The Case of Bolivia," Working Papers PMMA 2017-10, PEP-PMMA.
    • Handle: RePEc:lvl:pmmacr:2017-10
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    Cited by:

    1. Demirgüç-Kunt, Asli & Lokshin, Michael & Kolchin, Vladimir, 2023. "Effects of public sector wages on corruption: Wage inequality matters," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 941-959.
    2. Marjan Petreski & Nikica Mojsoska Blazevski & Mariko Ouchi, 2019. "The Minimum Wage As A Wage Equality Policy: Evidence From North Macedonia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 61-82, October –.

    More about this item

    Keywords

    Minimum wage; unemployment; informal employment;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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