Minimum Wages and the Wage Structure in Mexico

Fairris, David; Popli, Gurleen; Zepeda, Eduardo

doi:10.1080/00346760701691489

Cited by 32 publications

(33 citation statements)

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“…Using household survey data, Neri et al (2001) show that the minimum wage truncates the earnings distribution in the informal sector, but not in the formal sector, as predicated by standard dual economy models. To some extent, this effect is also observed in Mexico on the basis of household survey data (Fairris et al, 2006). These findings suggest that the interactions between the formal and informal sectors in response to changes in the minimum wage may be more complex in practice than in theory.…”

Section: Developing Countriesmentioning

confidence: 58%

How Does Decentralized Minimum Wage Setting Affect Employment and Informality? The Case of Indonesia

Comola

Mello

2011

Review of Income and Wealth

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The Indonesian labor market is characterized by widespread and growing informality (defined as non‐salaried work). To what extent can the growth in informality be attributed to a sharp increase in the real value of the minimum wage since 2001, when minimum‐wage setting was decentralized to the provincial governments? To answer this and related questions we use survey data on the labor market, on household income and expenditure, and on the industrial sector to construct a district‐level dataset spanning the period 1996 to 2004. The effects of changes in the minimum wage on unemployment, formal‐sector employment, and the incidence of informality in urban areas are estimated by fixed effects with a seemingly unrelated regression estimator. We find that an increase in the ratio of the minimum to the mean wage is associated with a net increase in employment: a rise in informal‐sector employment more than compensates for job losses in the formal sector.

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Section: Developing Countriesmentioning

confidence: 58%

How Does Decentralized Minimum Wage Setting Affect Employment and Informality? The Case of Indonesia

Comola

Mello

2011

Review of Income and Wealth

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“…Using household-survey data, Neri, Gonzaga and Camargo (2001) show that the minimum wage truncates the earnings distribution in the informal sector, but not in the formal sector, as predicated by standard dual-economy models. To some extent, this effect is also observed in Mexico on the basis of household-survey data (Fairris et al, 2005). These findings suggest that the interactions between the formal and informal sectors in response to changes in the minimum wage may be more complex in practice than in theory.…”

Section: Developing Countriesmentioning

confidence: 54%

How Does Decentralised Minimum-Wage Setting Affect Unemployment and Informality?

Comola

Mello

2009

OECD Economics Department Working Papers

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JT03267795The case of IndonesiaThe Indonesian labour market is characterised by widespread informality. To some extent, these outcomes can be attributed to a sharp increase in the real value of the minimum wage since 2001, when minimum-wage setting was decentralised to the provincial governments. To test this hypothesis, this paper uses survey data on the labour market (Sakernas), household income and expenditure (Susenas) and the industrial sector (Survei Industri) to construct a district-level dataset spanning the period 1996 to 2004. The effects of changes in the minimum wage on unemployment, formal-sector employment and the incidence of informality in urban areas are estimated separately by fixed effects and jointly by a seemingly unrelated regression (SUR) estimator. Our findings show that an increase in the minimum-to-mean wage ratio is associated with a net increase in employment: a rise in informal-sector employment more than compensates for job losses in the formal sector. This Working Paper relates to the 2008 OECD Economic Assessment of Indonesia (www.oecd.org/eco/surveys/indonesia).JEL codes: J23; J31; J64

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“…Previous studies show evidence of clustering of wage levels at exact multiples of the minimum wage in Mexico using both household surveys (Castellanos, 2005 2008) show that this clustering is observed not only for formal workers, but also for informal ones. In addition, Fairris et al (2008) show evidence suggesting that changes in the minimum wage affect overall wage changes, particularly for workers in the mid-to-lower tail of the wage distribution. In sum, the high correlation of our estimated focal point with the change in the minimum wage is consistent with previous studies.…”

Section: Estimation Resultsmentioning

confidence: 98%

“…We use the seasonally adjusted quarterly Mexican GDP in 2008 prices to calculate the quarter-to-quarter variation and identify these recession periods. The original series is available at Banco de Informacion Economica, INEGI,http://www.inegi.org.mx/sistemas/bie 12. Figure A1in the appendix presents a similar graph, but using the current values of the inflation measures and the change in the minimum wage.…”

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confidence: 99%

Downward Wage Rigidities in the Mexican Labor Market 1996-2011

Juarez¹,

Daniel²

2016

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La serie de Documentos de Investigación del Banco de México divulga resultados preliminares de trabajos de investigación económica realizados en el Banco de México con la finalidad de propiciar el intercambio y debate de ideas. El contenido de los Documentos de Investigación, así como las conclusiones que de ellos se derivan, son responsabilidad exclusiva de los autores y no reflejan necesariamente las del Banco de México.The Working Papers series of Banco de México disseminates preliminary results of economic research conducted at Banco de México in order to promote the exchange and debate of ideas. The views and conclusions presented in the Working Papers are exclusively the responsibility of the authors and do not necessarily reflect those of Banco de México. Abstract: In this paper, we provide evidence on the existence and evolution of downward real and nominal wage rigidities in Mexico in the period 1996-2011, which was characterized by a reduction in the level and volatility of inflation. Our results suggest that, throughout the period, a larger fraction of private sector workers, who stayed in the same job from one year to another, were subject to downward real wage rigidities than to downward nominal wage rigidities. The relative importance of downward nominal wage rigidities seems to have increased slightly as inflation decreased, as found in studies for some other countries that achieved a lower and more stable inflation.Resumen: En este artículo, proporcionamos evidencia de la existencia y evolución de las rigideces salariales reales y nominales a la baja en México en el periodo 1996-2011, el cual estuvo caracterizado por una reducción en el nivel y volatilidad de la inflación. Nuestros resultados sugieren que, durante todo el periodo, una fracción más grande de trabajadores del sector privado, que permanecieron en el mismo trabajo de un año a otro, estuvieron sujetos a rigideces salariales reales a la baja que a rigideces salariales nominales a la baja. La importancia relativa de las rigideces salariales nominales a la baja parece haberse incrementado ligeramente conforme la inflación disminuyó, como se ha encontrado en estudios para algunos otros países que lograron una inflación más baja y estable. Palabras Clave: rigideces salariales a la baja, indexación salarial.

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Minimum Wages and the Wage Structure in Mexico

Cited by 32 publications

References 25 publications

How Does Decentralized Minimum Wage Setting Affect Employment and Informality? The Case of Indonesia

How Does Decentralized Minimum Wage Setting Affect Employment and Informality? The Case of Indonesia

How Does Decentralised Minimum-Wage Setting Affect Unemployment and Informality?

Downward Wage Rigidities in the Mexican Labor Market 1996-2011

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