The Minimum Wage Impact on Poverty in Mexico

16 Pages Posted: 29 Nov 2023

See all articles by Luis Felipe Munguia Corella

Luis Felipe Munguia Corella

Comisión Nacional de los Salarios Mínimos

Marco Antonio Gomez Lovera

Comisión Nacional de los Salarios Mínimos

Date Written: November 7, 2023

Abstract

This study contributes to the public debate on the effect of the minimum wage on poverty and provides the first estimate specifically for multidimensional poverty in Mexico. We find that the elasticity of poverty to the minimum wage is -0.36. This implies that between 2019 and 2022, the number of people in poverty decreased by 23.7% because of the minimum wage. In other words, of the 5.1 million people who escaped poverty, 4.1 million can be attributed exclusively to the minimum wage increase. Additional results indicate that minimum wage increases did not significantly impact the level of employment but did have an impact on labor income. As for social programs, the universal pension shows that a 10% increase in its funding reduces poverty by 13%; a 10% increase in basic education scholarships income contributes to a 3.5% reduction in income poverty.

Keywords: minimum wage, poverty, labor policy

JEL Classification: j31, j42

Suggested Citation

Munguia Corella, Luis Felipe and Gomez Lovera, Marco Antonio, The Minimum Wage Impact on Poverty in Mexico (November 7, 2023). Available at SSRN: https://ssrn.com/abstract=4626139 or http://dx.doi.org/10.2139/ssrn.4626139

Luis Felipe Munguia Corella (Contact Author)

Comisión Nacional de los Salarios Mínimos ( email )

Ave. Cuauhtémoc 14
Col. Doctores
Ciudad de México, Ciudad de México 06720
Mexico

Marco Antonio Gomez Lovera

Comisión Nacional de los Salarios Mínimos ( email )

Ave. Cuauhtémoc 14
Col. Doctores
Ciudad de México, Ciudad de México 06720
Mexico

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