Measuring the Impact of Minimum Wages : Evidence from Latin America

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Maloney, William F.
dc.contributor.author
Nunez, Jairo
dc.contributor.author
Cunningham, Wendy
dc.contributor.author
Fiess, Norbert
dc.contributor.author
Montenegro, Claudio
dc.contributor.author
Murrugarra, Edmundo
dc.contributor.author
Santamaria, Mauricio
dc.contributor.author
Sepulveda, Claudia
dc.date.accessioned
2014-08-26T15:01:01Z
dc.date.available
2014-08-26T15:01:01Z
dc.date.issued
2001-04
dc.date.lastModified
2021-04-23T14:03:43Z
dc.description.abstract
The authors provide an overview of minimum wage levels in Latin America and their true impact on the distribution of wages, using both numerical measures and kernal density plots for eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Honduras, Mexico, and Uruguay). They especially try to identify "numeraire" effects--where the minimum is used as a reference higher in the wage distribution--and "lighthouse" effects--where it influences wage setting in the unregulated or "informal" sector. Their main findings: First, statutory minimum wages are often misleading, and graphical methods may be more reliable. Second, the minimum wage's effect on wage setting extends far beyond what is usually considered and probably beyond the effect in industrial countries. Using panel employment data from Colombia, where minimum wages seem high and binding, the authors quantify the minimum wage's effects on wages and on the probability of becoming unemployed. The Colombian case confirms the evidence offered by kernal density estimates: 1) The minimum wage can have an important impact on wage distribution in the neighborhood of the minimum wage. 2) The effects echo up the wage distribution in a clear demonstration of the "numeraire" effect. That this effect is stronger in Latin America than in the United States suggests that the minimum wage induces further-reaching rigidities in the labor market. The trade-off between any possible effect on poverty and reduced flexibility is likely to be more severe in countries where this is the case. The effects on employment, and unemployment, are substantial. 3) Informal salaries wages are also affected, confirming the graphical evidence of strong lighthouse effects. Self-employment earnings are not, however, confirming that the minimum wage is not simply serving as a measure of inflationary expectations.
en
dc.identifier
http://documents.worldbank.org/curated/en/2001/04/1121190/measuring-impact-minimum-wages-evidence-latin-america
dc.identifier.uri
http://hdl.handle.net/10986/19665
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 2597
dc.rights
CC BY 3.0 IGO
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
CDF
dc.subject
DEFORESTATION
dc.subject
DISTORTIONARY EFFECTS
dc.subject
EARNINGS
dc.subject
ECONOMIC ACTIVITY
dc.subject
ECONOMIC PERSPECTIVES
dc.subject
ECONOMIC REVIEW
dc.subject
ELASTICITIES
dc.subject
EMPIRICAL EVIDENCE
dc.subject
EMPLOYMENT
dc.subject
EQUILIBRIUM
dc.subject
FAMILIES
dc.subject
FATHERS
dc.subject
FOOD INDUSTRY
dc.subject
HEALTH INSURANCE
dc.subject
HOUSEHOLD SURVEY
dc.subject
HUMAN CAPITAL
dc.subject
INCOME
dc.subject
INDEXATION
dc.subject
INFLATION
dc.subject
INFLATION RATES
dc.subject
INFORMAL EMPLOYMENT
dc.subject
INFORMAL SECTOR
dc.subject
INFORMAL SECTORS
dc.subject
INSURANCE
dc.subject
JOB LOSS
dc.subject
LABOR LAWS
dc.subject
LABOR MARKET
dc.subject
LABOR MARKETS
dc.subject
LABOR PRODUCTIVITY
dc.subject
LEGISLATION
dc.subject
MARKET DISTORTIONS
dc.subject
MIGRATION
dc.subject
MINIMUM WAGE
dc.subject
MINIMUM WAGES
dc.subject
OPTION VALUE
dc.subject
POLICY MAKERS
dc.subject
POLICY RESEARCH
dc.subject
PUBLIC HEALTH
dc.subject
RAISES
dc.subject
REAL WAGES
dc.subject
REMUNERATION
dc.subject
SALARIES
dc.subject
SECURITIES
dc.subject
SOCIAL SECURITY
dc.subject
STRUCTURAL ADJUSTMENT
dc.subject
UNEMPLOYMENT
dc.subject
UNEMPLOYMENT INSURANCE
dc.subject
UNEMPLOYMENT RATES
dc.subject
URBAN AREAS
dc.subject
WAGE EARNERS
dc.subject
WAGE INCREASES
dc.subject
WAGE LEVELS
dc.subject
WAGE RIGIDITIES
dc.subject
YOUNG WORKERS
dc.subject
YOUTH
dc.title
Measuring the Impact of Minimum Wages : Evidence from Latin America
en
okr.crosscuttingsolutionarea
Jobs
okr.date.disclosure
2001-04-30
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.doctype
Publications & Research
okr.docurl
http://documents.worldbank.org/curated/en/2001/04/1121190/measuring-impact-minimum-wages-evidence-latin-america
okr.globalpractice
Social Protection and Labor
okr.globalpractice
Poverty
okr.globalpractice
Health, Nutrition, and Population
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-2597
okr.identifier.externaldocumentum
000094946_0105170419568
okr.identifier.internaldocumentum
1121190
okr.identifier.report
WPS2597
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/05/25/000094946_0105170419568/Rendered/PDF/multi0page.pdf
en
okr.region.administrative
Latin America & Caribbean
okr.theme
Social protection and risk management :: Improving labor markets
okr.topic
Social Protections and Labor :: Child Labor
okr.topic
Health Monitoring and Evaluation
okr.topic
Environmental Economics and Policies
okr.topic
Social Protections and Labor :: Labor Policies
okr.topic
Wages
okr.topic
Compensation and Benefits
okr.topic
Health, Nutrition and Population :: Public Health Promotion
okr.topic
Poverty Reduction :: Poverty Assessment
okr.unit
Poverty Sector Unit and the Office of the Chief Economist, Latin America and the Caribbean Region
okr.volume
1

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