Working Paper: NBER ID: w26462
Authors: David Neumark; Luis Felipe Munguia Corella
Abstract: Evidence from studies of the employment effects of minimum wages in developing countries is mixed. One interpretation is that there is simply no clear evidence of disemployment effects in developing countries. Instead, however, we find evidence that the heterogeneity is systematic, with estimated effects more consistently negative in studies with relatively more features for which institutional factors and the competitive model more strongly predict negative effects. These features include whether studies: (i) focus on vulnerable workers; (ii) use data for the formal sector; (iii) cover countries where minimum wage laws are strongly enforced; and (iv) estimate effects for countries and periods with binding minimum wages.
Keywords: No keywords provided
JEL Codes: J18; J23; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage laws are binding (J38) | adverse employment effects (J79) |
| strong enforcement of minimum wage laws (J38) | more negative employment effects (J65) |
| binding minimum wages and strong enforcement (J38) | negative employment elasticities (D12) |
| features predicting negative effects (D91) | likelihood of finding negative employment effects increases (J68) |
| minimum wage laws in the formal sector (J38) | stronger evidence for negative employment effects (J68) |
| competitive model predictions (L13) | likelihood of negative employment effects increases (F66) |
| presence of monopsony power (J42) | positive employment estimates (J68) |