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Minimum Wage and Job Mobility

  • Céspedes, Nikita

    (Banco Central de Reserva del Perú
    PUCP)

  • Sánchez, Alan

    (GRADE)

We study the effects of the minimum wage in over employment and income by considering a monthly database that captures seven minimum wage changes registered between 2002 and 2011. We estimate that about 1 million workers have an income by main occupation in the neighbourhood of the minimum wage. We found that the minimum wage-income elasticity is statistically significant; the evidence also suggests that those who receive low incomes and those working in small businesses are the most affected by increases in the minimum wage. Employment effects are monotonically decreasing in absolute terms by firm size: moderate in big firms and higher in small firms. Results are robust when assessing the job-to-job transitions. Finally, we present evidence that supports the hypothesis that the minimum wage in Peru is correlated with income. The movement of income distribution in the context of changes in the minimum wage as well as the results provided by a model that captures the drivers of income justify this result.

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Paper provided by Banco Central de Reserva del Perú in its series Working Papers with number 2013-012.

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Date of creation: Aug 2013
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Handle: RePEc:rbp:wpaper:2013-012
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  1. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
  2. Gerard J. van den Berg & Geert Ridder, 1998. "An Empirical Equilibrium Search Model of the Labor Market," Econometrica, Econometric Society, vol. 66(5), pages 1183-1222, September.
  3. Peter F. Orazem & J. Peter Mattila, 2002. "Minimum Wage Effects on Hours, Employment, and Number of Firms: The Iowa Case," Journal of Labor Research, Transaction Publishers, vol. 23(1), pages 3-23, January.
  4. Nikita R. Céspedes Reynaga, 2005. "Efectos del Salario Mínimo en el Mercado Laboral Peruano," Working Papers 2005-003, Banco Central de Reserva del Perú.
  5. Gerard J. van den Berg, 1998. "Empirical Inference with Equilibrium Search Models of the Labor Market," Tinbergen Institute Discussion Papers 98-089/3, Tinbergen Institute.
  6. Robert H. Meyer & David A. Wise, 1981. "Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth," NBER Working Papers 0711, National Bureau of Economic Research, Inc.
  7. Nikita Céspedes & Ana Paola Gutiérrez & Vanessa Belapatiño, 2014. "Determinantes de la duración del desempleo en una economía con alta informalidad," Working Papers 2014-2, Peruvian Economic Association.
  8. David Neumark & William Wascher, 1992. "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws," ILR Review, Cornell University, ILR School, vol. 46(1), pages 55-81, October.
  9. Gerard J. van den Berg, 1998. "Empirical Inference with Equilibrium Search Models of the Labor Market," Tinbergen Institute Discussion Papers 98-089/3, Tinbergen Institute.
  10. Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
  11. Jose Rodriguez & Minoru Higa, 2010. "Informalidad, empleo y productividad," Documentos de Trabajo / Working Papers 2010-282, Departamento de Economía - Pontificia Universidad Católica del Perú.
  12. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S102-35, July.
  13. Pereira, Sonia C., 2003. "The impact of minimum wages on youth employment in Portugal," European Economic Review, Elsevier, vol. 47(2), pages 229-244, April.
  14. Miguel Jaramillo & Kristian López, 2006. "¿Cómo se ajusta el mercado de trabajo ante cambios en el salario mínimo en el Perú? Una evaluación de la experiencia de la última década," Documentos de Investigación dt50, Grupo de Análisis para el Desarrollo (GRADE).
  15. Miguel Jaramillo Baanante, 2012. "Ajustes del mercado laboral peruano ante cambios en el salario mínimo: la experiencia de la década del 2000," Capítulos de Libros PUCP / Chapters of PUCP books, in: Cecilia Garavito & Ismael Muñoz (ed.), EMPLEO Y PROTECCIÓN SOCIAL, edition 1, chapter 11, pages 357-402 Departamento de Economía - Pontificia Universidad Católica del Perú.
  16. Michele Campolieti & Tony Fang & Morley Gunderson, 2005. "Minimum wage impacts on youth employment transitions, 1993-1999," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 81-104, February.
  17. Del Valle, Marielle, 2009. "Impacto del ajuste de la Remuneración Mínima Vital sobre el empleo y la informalidad," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 16, pages 83-102.
  18. repec:dgr:uvatin:2098089 is not listed on IDEAS
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