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Assessing the Distributive Effects of Minimum Wage

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  • Borraz, Fernando
  • González Pampillón

Abstract

This paper analyzes the role of Uruguay’s sharp minimum wage increases after 2004 amidst the country’s slight wage inequality decrease. We found that the minimum wage increase has contributed to the reduction of wage inequality for formal workers mainly. However, we also found a negative impact on employment outside the capital city, Montevideo, and observed a reduction in working hours. These results raise doubts about the effectiveness of minimum wage as a redistribution instrument in developing countries.

Suggested Citation

  • Borraz, Fernando & González Pampillón, 2017. "Assessing the Distributive Effects of Minimum Wage," GLO Discussion Paper Series 10, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:10
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    References listed on IDEAS

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    Cited by:

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    2. Pérez Pérez, Jorge, 2020. "The minimum wage in formal and informal sectors: Evidence from an inflation shock," World Development, Elsevier, vol. 133(C).

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    More about this item

    Keywords

    minimum wage; wage inequality; instrumental variables; employment effect; difference in difference;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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