Working Paper: CEPR ID: DP7882
Authors: Mariano Bosch; Marco Manacorda
Abstract: This paper analyzes the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980s and the early 2000s. We find that a substantial part of the growth in inequality, and essentially all the growth in inequality in the bottom end, is due to the steep decline in the real value of the minimum wage.
Keywords: Mexico; Minimum Wage; Wage Inequality
JEL Codes: J31; J38; O15; O17; O24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decline in the real value of the minimum wage (J38) | increase in earnings inequality (D31) |
| decline in the real value of the minimum wage (J38) | increase in wage dispersion (J31) |
| 10 percentage point increase in the effective minimum wage (J38) | increase in earnings gap between bottom decile and seventh decile (D31) |
| increase in the minimum wage (J38) | positive effect on earnings at lower percentiles up to the sixth decile (J31) |