Cunningham, Wendy2012-05-312012-05-3120070-8213-7011-1https://hdl.handle.net/10986/6760This report examines how minimum wages affect the income poverty of workers, their households, and the state. It does not question whether or not the minimum wage is a good policy: instead, it focuses on the tradeoffs in setting the minimum wage level. It takes as a starting point the literature on the wage and employment effects of minimum wages in Latin America and expands the discussion in three ways. First, the household is placed at the center of the debate. Poverty and inequality are measured at the level of the household, rather than at the individual level, to allow for employment and wage trade-offs among individuals who pool their income. Second, new research is presented on how the minimum wage affects groups whose labor market participation and success is considered "vulnerable": that is, youth, women, the low-skilled, and informal sector workers. Third, the implications of the minimum wage on wage and social expenditures of the government are measured. In the end, the report argues that the minimum wage by itself is not a sufficient tool for protecting the income of the poorest households, and that other social protection tools are necessary to complement it. The report has eight sections following the introduction. Chapter 2 presents a history of the minimum wage in LAC, the theory behind the functioning of the minimum wage, and empirical evidence from the OECD to lay a foundation for the Latin American experience. Chapter 3 presents an overview of the minimum wage in the Region, including a discussion of the definition of a minimum wage, institutional design, and who earns it. Chapter 4 focuses on the worker; it summarizes the existing literature, presents new evidence on the wage and employment effects of a minimum wage, and gives special attention to "vulnerable" labor market groups. Chapter 5 turns its attention to the household and presents the new (and only) evidence on the effects of the minimum wage on household poverty and inequality in LAC. Chapter 6 considers the state and discusses the cost of minimum wages to the government. Chapter 7 opens the discussion to the rest of the world and considers the lessons learned in other countries about setting, managing, and enforcing the minimum wage. Finally, chapter 8 concludes and presents policy considerations.en-USCC BY 3.0 IGOAVERAGE WAGEAVERAGE WAGESBARGAINING POWERBENEFICIARIESCASH TRANSFERSCLOSED ECONOMIESCOLLECTIVE BARGAININGCOMPETITIVE MARKETCURRENCYDEMOGRAPHIC GROUPDEMOGRAPHIC GROUPSDISMISSED WORKERSDOMESTIC CURRENCYDOMESTIC WORKERSEARNINGEARNINGSEARNINGS OF WOMENECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC THEORYECONOMICSEFFICIENCY WAGESEMPLOYEEEMPLOYMENTEMPLOYMENT EFFECTSEXTERNALITIESFAMILY INCOMEFAMILY MEMBERSFEMALE WORKERSFINANCESFIRM SIZEFORMAL EDUCATIONFORMAL SECTOR WAGEFORMAL SECTOR WAGESGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELSGENERAL POPULATIONGINI COEFFICIENTHIGH WAGEHOUSEHOLD CONSUMPTIONHOUSEHOLD INCOMEHOUSEHOLD INCOME INEQUALITYHOUSEHOLD WEALTHHUMAN CAPITALINCOME DISTRIBUTIONINCOME REDISTRIBUTIONINCOMESINCREASE IN INCOMESINFLATIONINFORMAL SECTORINFORMAL SECTOR WORKERSJOB EXPERIENCEJOB LOSSJOB LOSSESJOBSLABOR DEMANDLABOR FORCELABOR INCOMELABOR LAWSLABOR LEGISLATIONLABOR MARKETLABOR MARKET CONDITIONSLABOR MARKETSLABOR MINISTRIESLABOR ORGANIZATIONLABOR SHORTAGELABOR STANDARDSLABOR SUPPLYLABOR SUPPLY INCENTIVESLABOR TURNOVERLABORERSLABOURLARGE FIRMSLATIN AMERICANLAYOFFSLIVING STANDARDSLOW INCOMESLOW-INCOMEMALE WORKERSMANUFACTURING WAGEMARITIME WORKERSMARKET ECONOMIESMARKET WAGEMARKET WAGESMAXIMUM WAGEMINIMUM WAGEMINIMUM WAGE LAWMINIMUM WAGESMONOPSONYMONOPSONY POWERMOTIVATIONOCCUPATIONOCCUPATIONSOLDER WORKERSPENSIONPENSION ISSUEPOLITICAL ECONOMYPOVERTY ALLEVIATIONPOVERTY LINEPOVERTY LINESPOVERTY RATESPRICE INDEXPRIMARY EDUCATIONPRIMARY SCHOOLPRODUCTIVITYPRODUCTIVITY LEVELSPUBLIC EXPENDITURESPUBLIC WORKSPURCHASING POWERREAL WAGESRENTSRESEARCH ASSISTANCERESOURCE ALLOCATIONRURAL WORKERSSAFETYSAFETY NETSSALARIED WORKERSALARIED WORKERSSALARIESSECONDARY SCHOOLSELF-EMPLOYMENTSEVERANCESEVERANCE PAYSEVERANCE PAY SYSTEMSKILLED LABORSOCIAL BENEFITSSOCIAL INSURANCESOCIAL PROTECTIONSOCIAL WELFARETRADE LIBERALIZATIONTRADE UNIONSTRINIDAD AND TOBAGOUNEMPLOYEDUNEMPLOYED POORUNEMPLOYMENTUNEMPLOYMENT BENEFITUNSKILLED WORKERSVALUABLEWAGE ADJUSTMENTWAGE BILLWAGE BOARDSWAGE DETERMINATIONWAGE DISTRIBUTIONWAGE EARNERSWAGE EFFECTSWAGE EMPLOYMENTWAGE FLOORWAGE GAINWAGE GAINSWAGE GAPWAGE INCREASEWAGE INCREASESWAGE INEQUALITYWAGE LEVELWAGE LEVELSWAGE POLICIESWAGE POLICYWAGE SECTORWAGE SETWAGE STRUCTUREWESTERN EUROPEWORKERWORKERSWORKING POORWORLD MARKETYOUNG PEOPLEYOUNG WORKERSYOUTH UNEMPLOYMENTWorld Bank10.1596/978-0-8213-7011-7