Measuring the Impact of Minimum Wages : Evidence from Latin America
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, Hon...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/04/1121190/measuring-impact-minimum-wages-evidence-latin-america http://hdl.handle.net/10986/19665 |
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okr-10986-196652021-04-23T14:03:43Z Measuring the Impact of Minimum Wages : Evidence from Latin America Maloney, William F. Nunez, Jairo Cunningham, Wendy Fiess, Norbert Montenegro, Claudio Murrugarra, Edmundo Santamaria, Mauricio Sepulveda, Claudia CDF DEFORESTATION DISTORTIONARY EFFECTS EARNINGS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW ELASTICITIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM FAMILIES FATHERS FOOD INDUSTRY HEALTH INSURANCE HOUSEHOLD SURVEY HUMAN CAPITAL INCOME INDEXATION INFLATION INFLATION RATES INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMAL SECTORS INSURANCE JOB LOSS LABOR LAWS LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LEGISLATION MARKET DISTORTIONS MIGRATION MINIMUM WAGE MINIMUM WAGES OPTION VALUE POLICY MAKERS POLICY RESEARCH PUBLIC HEALTH RAISES REAL WAGES REMUNERATION SALARIES SECURITIES SOCIAL SECURITY STRUCTURAL ADJUSTMENT UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATES URBAN AREAS WAGE EARNERS WAGE INCREASES WAGE LEVELS WAGE RIGIDITIES YOUNG WORKERS YOUTH 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. 2014-08-26T15:01:01Z 2014-08-26T15:01:01Z 2001-04 http://documents.worldbank.org/curated/en/2001/04/1121190/measuring-impact-minimum-wages-evidence-latin-america http://hdl.handle.net/10986/19665 English en_US Policy Research Working Paper;No. 2597 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
CDF DEFORESTATION DISTORTIONARY EFFECTS EARNINGS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW ELASTICITIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM FAMILIES FATHERS FOOD INDUSTRY HEALTH INSURANCE HOUSEHOLD SURVEY HUMAN CAPITAL INCOME INDEXATION INFLATION INFLATION RATES INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMAL SECTORS INSURANCE JOB LOSS LABOR LAWS LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LEGISLATION MARKET DISTORTIONS MIGRATION MINIMUM WAGE MINIMUM WAGES OPTION VALUE POLICY MAKERS POLICY RESEARCH PUBLIC HEALTH RAISES REAL WAGES REMUNERATION SALARIES SECURITIES SOCIAL SECURITY STRUCTURAL ADJUSTMENT UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATES URBAN AREAS WAGE EARNERS WAGE INCREASES WAGE LEVELS WAGE RIGIDITIES YOUNG WORKERS YOUTH |
| spellingShingle |
CDF DEFORESTATION DISTORTIONARY EFFECTS EARNINGS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW ELASTICITIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM FAMILIES FATHERS FOOD INDUSTRY HEALTH INSURANCE HOUSEHOLD SURVEY HUMAN CAPITAL INCOME INDEXATION INFLATION INFLATION RATES INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMAL SECTORS INSURANCE JOB LOSS LABOR LAWS LABOR MARKET LABOR MARKETS LABOR PRODUCTIVITY LEGISLATION MARKET DISTORTIONS MIGRATION MINIMUM WAGE MINIMUM WAGES OPTION VALUE POLICY MAKERS POLICY RESEARCH PUBLIC HEALTH RAISES REAL WAGES REMUNERATION SALARIES SECURITIES SOCIAL SECURITY STRUCTURAL ADJUSTMENT UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNEMPLOYMENT RATES URBAN AREAS WAGE EARNERS WAGE INCREASES WAGE LEVELS WAGE RIGIDITIES YOUNG WORKERS YOUTH Maloney, William F. Nunez, Jairo Cunningham, Wendy Fiess, Norbert Montenegro, Claudio Murrugarra, Edmundo Santamaria, Mauricio Sepulveda, Claudia Measuring the Impact of Minimum Wages : Evidence from Latin America |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Paper;No. 2597 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Maloney, William F. Nunez, Jairo Cunningham, Wendy Fiess, Norbert Montenegro, Claudio Murrugarra, Edmundo Santamaria, Mauricio Sepulveda, Claudia |
| author_facet |
Maloney, William F. Nunez, Jairo Cunningham, Wendy Fiess, Norbert Montenegro, Claudio Murrugarra, Edmundo Santamaria, Mauricio Sepulveda, Claudia |
| author_sort |
Maloney, William F. |
| title |
Measuring the Impact of Minimum Wages : Evidence from Latin America |
| title_short |
Measuring the Impact of Minimum Wages : Evidence from Latin America |
| title_full |
Measuring the Impact of Minimum Wages : Evidence from Latin America |
| title_fullStr |
Measuring the Impact of Minimum Wages : Evidence from Latin America |
| title_full_unstemmed |
Measuring the Impact of Minimum Wages : Evidence from Latin America |
| title_sort |
measuring the impact of minimum wages : evidence from latin america |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/04/1121190/measuring-impact-minimum-wages-evidence-latin-america http://hdl.handle.net/10986/19665 |
| _version_ |
1764440271803645952 |