Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries
Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understand...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/03/6667846/minimum-wages-latin-america-caribbean-matter-evidence-19-countries http://hdl.handle.net/10986/8337 |
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okr-10986-83372021-04-23T14:02:40Z Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries Kristensen, Nicolai Cunningham, Wendy ADULT WORKERS AVERAGE WAGE AVERAGE WAGES BARGAINING POWER DOMESTIC WORKERS EARNING EARNINGS EMPLOYMENT EMPLOYMENT EFFECTS FIRM SIZE FORMAL SECTOR WAGE FORMAL SECTOR WAGES HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INCOME INEQUALITY INCOMES INFORMAL SECTOR INFORMAL SECTOR WORKERS JOB DURATION JOBS LABOR FORCE LABOR FORCE POPULATION LABOR MARKET LABOR MARKET CONDITIONS LABOR MARKETS LABOR SUPPLY LABOR SURVEYS LATIN AMERICAN LOCAL LABOR MARKET LOW INCOME MARKET WAGES MINIMUM WAGE MINIMUM WAGE LAWS MINIMUM WAGES OCCUPATION OCCUPATIONS OLDER WORKERS PER CAPITA INCOME POOR FAMILIES POVERTY LINE POVERTY LINES PRIMARY EDUCATION PRIMARY SCHOOL PRIMARY SCHOOL EDUCATION PRIME AGE PRODUCTIVITY PRODUCTIVITY LEVEL PRODUCTIVITY LEVELS REMUNERATION SALARY SANCTIONS SKILLED WORKERS TRINIDAD AND TOBAGO UNEMPLOYMENT UNEMPLOYMENT RATES UNPAID WORKERS UNSKILLED WORKER UNSKILLED WORKERS WAGE BARGAINING WAGE DISPERSION WAGE DISTRIBUTION WAGE EARNERS WAGE EFFECTS WAGE FLOOR WAGE LEVEL WAGE LEVELS WAGE STRUCTURE WORK FORCE WORKER WORKERS YOUNG WORKERS YOUTH Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can "lock in" wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage is important for determining whose wages are affected. 2012-06-18T20:00:35Z 2012-06-18T20:00:35Z 2006-03 http://documents.worldbank.org/curated/en/2006/03/6667846/minimum-wages-latin-america-caribbean-matter-evidence-19-countries http://hdl.handle.net/10986/8337 English Policy Research Working Paper; No. 3870 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank 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 |
| topic |
ADULT WORKERS AVERAGE WAGE AVERAGE WAGES BARGAINING POWER DOMESTIC WORKERS EARNING EARNINGS EMPLOYMENT EMPLOYMENT EFFECTS FIRM SIZE FORMAL SECTOR WAGE FORMAL SECTOR WAGES HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INCOME INEQUALITY INCOMES INFORMAL SECTOR INFORMAL SECTOR WORKERS JOB DURATION JOBS LABOR FORCE LABOR FORCE POPULATION LABOR MARKET LABOR MARKET CONDITIONS LABOR MARKETS LABOR SUPPLY LABOR SURVEYS LATIN AMERICAN LOCAL LABOR MARKET LOW INCOME MARKET WAGES MINIMUM WAGE MINIMUM WAGE LAWS MINIMUM WAGES OCCUPATION OCCUPATIONS OLDER WORKERS PER CAPITA INCOME POOR FAMILIES POVERTY LINE POVERTY LINES PRIMARY EDUCATION PRIMARY SCHOOL PRIMARY SCHOOL EDUCATION PRIME AGE PRODUCTIVITY PRODUCTIVITY LEVEL PRODUCTIVITY LEVELS REMUNERATION SALARY SANCTIONS SKILLED WORKERS TRINIDAD AND TOBAGO UNEMPLOYMENT UNEMPLOYMENT RATES UNPAID WORKERS UNSKILLED WORKER UNSKILLED WORKERS WAGE BARGAINING WAGE DISPERSION WAGE DISTRIBUTION WAGE EARNERS WAGE EFFECTS WAGE FLOOR WAGE LEVEL WAGE LEVELS WAGE STRUCTURE WORK FORCE WORKER WORKERS YOUNG WORKERS YOUTH |
| spellingShingle |
ADULT WORKERS AVERAGE WAGE AVERAGE WAGES BARGAINING POWER DOMESTIC WORKERS EARNING EARNINGS EMPLOYMENT EMPLOYMENT EFFECTS FIRM SIZE FORMAL SECTOR WAGE FORMAL SECTOR WAGES HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INCOME INEQUALITY INCOMES INFORMAL SECTOR INFORMAL SECTOR WORKERS JOB DURATION JOBS LABOR FORCE LABOR FORCE POPULATION LABOR MARKET LABOR MARKET CONDITIONS LABOR MARKETS LABOR SUPPLY LABOR SURVEYS LATIN AMERICAN LOCAL LABOR MARKET LOW INCOME MARKET WAGES MINIMUM WAGE MINIMUM WAGE LAWS MINIMUM WAGES OCCUPATION OCCUPATIONS OLDER WORKERS PER CAPITA INCOME POOR FAMILIES POVERTY LINE POVERTY LINES PRIMARY EDUCATION PRIMARY SCHOOL PRIMARY SCHOOL EDUCATION PRIME AGE PRODUCTIVITY PRODUCTIVITY LEVEL PRODUCTIVITY LEVELS REMUNERATION SALARY SANCTIONS SKILLED WORKERS TRINIDAD AND TOBAGO UNEMPLOYMENT UNEMPLOYMENT RATES UNPAID WORKERS UNSKILLED WORKER UNSKILLED WORKERS WAGE BARGAINING WAGE DISPERSION WAGE DISTRIBUTION WAGE EARNERS WAGE EFFECTS WAGE FLOOR WAGE LEVEL WAGE LEVELS WAGE STRUCTURE WORK FORCE WORKER WORKERS YOUNG WORKERS YOUTH Kristensen, Nicolai Cunningham, Wendy Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Paper; No. 3870 |
| description |
Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can "lock in" wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage is important for determining whose wages are affected. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kristensen, Nicolai Cunningham, Wendy |
| author_facet |
Kristensen, Nicolai Cunningham, Wendy |
| author_sort |
Kristensen, Nicolai |
| title |
Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| title_short |
Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| title_full |
Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| title_fullStr |
Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| title_full_unstemmed |
Do Minimum Wages in Latin America and the Caribbean Matter? Evidence from 19 Countries |
| title_sort |
do minimum wages in latin america and the caribbean matter? evidence from 19 countries |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/03/6667846/minimum-wages-latin-america-caribbean-matter-evidence-19-countries http://hdl.handle.net/10986/8337 |
| _version_ |
1764405802100064256 |