Measuring the Impact of Minimum Wages: Evidence from Latin America

29 Pages Posted: 23 Jun 2003

See all articles by William F. Maloney

William F. Maloney

World Bank - Poverty and Economic Management Unit; IZA Institute of Labor Economics; World Bank - Development Research Group (DECRG)

Jairo Nunez

Universidad de los Andes, Colombia - Department of Economics; Ministerio de la Proteccion Social

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Date Written: June 2003

Abstract

This paper first provides an overview of the levels of minimum wages in Latin America and their true impact on the distribution of wages using both numerical measures and kernel density plots. It identifies numeraire' effects higher in the wage distribution and lighthouse' or reference effects in the unregulated or informal' sector. The final section then employs panel employment data from Colombia, a country where minimum wages seem high and very binding, to quantify the effects of an increase on wages and employment. The evidence suggests that in the Latin American context, the minimum wage has impacts beyond those usually contemplated in the advanced country literature.

Suggested Citation

Maloney, William F. and Nunez Mendez, Jairo Augusto, Measuring the Impact of Minimum Wages: Evidence from Latin America (June 2003). NBER Working Paper No. w9800, Available at SSRN: https://ssrn.com/abstract=418302

William F. Maloney (Contact Author)

World Bank - Poverty and Economic Management Unit ( email )

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IZA Institute of Labor Economics

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World Bank - Development Research Group (DECRG)

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Jairo Augusto Nunez Mendez

Universidad de los Andes, Colombia - Department of Economics ( email )

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Colombia

Ministerio de la Proteccion Social

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Bogota
Colombia

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