Working Paper: NBER ID: w9800
Authors: William F. Maloney; Jairo Nuez Mendez
Abstract: This paper first provides an overview of the levels of minimum wages in Latin America and their true impact on the distribution of wages using both numerical measures and kernel density plots. It identifies numeraire' effects higher in the wage distribution and lighthouse' or reference effects in the unregulated or informal' sector. The final section then employs panel employment data from Colombia, a country where minimum wages seem high and very binding, to quantify the effects of an increase on wages and employment. The evidence suggests that in the Latin American context, the minimum wage has impacts beyond those usually contemplated in the advanced country literature.
Keywords: minimum wages; labor market; Latin America; employment; wage distribution
JEL Codes: J31; J38; O54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum wage increase (J38) | wage distribution (J31) |
| minimum wage increase (J38) | employment (J68) |
| minimum wage increase (J38) | higher wages (J39) |
| minimum wage increase (J38) | cliffs in wage distributions (J31) |
| minimum wage increase (J38) | employment elasticities for low-skilled workers (J69) |
| minimum wage increase (J38) | adverse employment outcomes (J79) |
| minimum wage increase (J38) | complex effects on employment by sector and skill level (F66) |