Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies

This paper uses a semiparametric model to analyze the impact of an increase in the real minimum wage on inequality in Colombia between 1995 and 1999 and in Paraguay between 1993 and 2000-2001. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying...

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Main Author:	Angel-Urdinola, Diego F.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Personal Income, Wealth, and Their Distributions D310 Wage Level and Structure Wage Differentials J310 Wages, Compensation, and Labor Costs: Public Policy J380 Economic Development: Human Resources Human Development Income Distribution Migration O150
Online Access:	http://hdl.handle.net/10986/5859

id	okr-10986-5859
recordtype	oai_dc
spelling	okr-10986-58592021-04-23T14:02:23Z Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies Angel-Urdinola, Diego F. Personal Income, Wealth, and Their Distributions D310 Wage Level and Structure Wage Differentials J310 Wages, Compensation, and Labor Costs: Public Policy J380 Economic Development: Human Resources Human Development Income Distribution Migration O150 This paper uses a semiparametric model to analyze the impact of an increase in the real minimum wage on inequality in Colombia between 1995 and 1999 and in Paraguay between 1993 and 2000-2001. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying policies would contribute to reduce earnings inequality in Colombia and would be inequality neutral in Paraguay. By considering the drop in wages of those who lost their jobs, simulations suggest that in both countries the policy in question would increase earnings inequality under some assumptions about the employment elasticity of the minimum wage and the new level of earnings unemployed workers rely upon. While these findings do not mean that minimum wage increases in LDCs (Less Developed Countries) necessarily have adverse distributional affects, they suggest that minimum wage policy should be implemented with care depending on how sensitive employment is to wage increases. 2012-03-30T07:34:53Z 2012-03-30T07:34:53Z 2008 Journal Article Journal of Economic Inequality 15691721 http://hdl.handle.net/10986/5859 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article Paraguay Colombia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Personal Income, Wealth, and Their Distributions D310 Wage Level and Structure Wage Differentials J310 Wages, Compensation, and Labor Costs: Public Policy J380 Economic Development: Human Resources Human Development Income Distribution Migration O150
spellingShingle	Personal Income, Wealth, and Their Distributions D310 Wage Level and Structure Wage Differentials J310 Wages, Compensation, and Labor Costs: Public Policy J380 Economic Development: Human Resources Human Development Income Distribution Migration O150 Angel-Urdinola, Diego F. Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
geographic_facet	Paraguay Colombia
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	This paper uses a semiparametric model to analyze the impact of an increase in the real minimum wage on inequality in Colombia between 1995 and 1999 and in Paraguay between 1993 and 2000-2001. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying policies would contribute to reduce earnings inequality in Colombia and would be inequality neutral in Paraguay. By considering the drop in wages of those who lost their jobs, simulations suggest that in both countries the policy in question would increase earnings inequality under some assumptions about the employment elasticity of the minimum wage and the new level of earnings unemployed workers rely upon. While these findings do not mean that minimum wage increases in LDCs (Less Developed Countries) necessarily have adverse distributional affects, they suggest that minimum wage policy should be implemented with care depending on how sensitive employment is to wage increases.
format	Journal Article
author	Angel-Urdinola, Diego F.
author_facet	Angel-Urdinola, Diego F.
author_sort	Angel-Urdinola, Diego F.
title	Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
title_short	Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
title_full	Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
title_fullStr	Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
title_full_unstemmed	Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies
title_sort	can a minimum wage increase have an adverse impact on inequality? evidence from two latin american economies
publishDate	2012
url	http://hdl.handle.net/10986/5859
_version_	1764396570333151232

Can a Minimum Wage Increase Have an Adverse Impact on Inequality? Evidence from Two Latin American Economies

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