Minimum Wage Violations in a Dual Labor Market with Multiple Floors
Posted: 1 Feb 2015
Date Written: January 29, 2015
Minimum wage compliance is studied by counting how many workers are paid below this floor. While useful, it is unable to identify the degree of underpayment. Recently, a family of violation indices has overcome this issue. I estimate these measures for Honduras, a dual labor market with multiple wage floors. First, I quantify industry-level violations by location and coverage status. Then, I estimate whether higher minimum wages affect non-compliance. The results reveal substantial variation in violations and that raising minimum wages leads to more underpaid workers but does not affect the degree by which they are underpaid.
Keywords: minimum wages, compliance, incidence and depth of violations, dual labor markets, Honduras
JEL Classification: J38, J42, O54
Suggested Citation: Suggested Citation