The effects of multiple minimum wages throughout the labor market: The case of Costa Rica

Gindling, T. H.; Terrell, Katherine

doi:10.1016/j.labeco.2006.01.004

Cited by 107 publications

(97 citation statements)

References 28 publications

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“…Some argue that they impede employment creation, especially of 'good' jobs (Heckman and Pagés 2003;Pagés and Micco 2006) while others argue that minimum wages can shift the composition of employment toward 'good jobs' (Acemoglu 2001). We have shown in companion studies that minimum wage legislation can reduce the share of good jobs in the formal/regulated sectors in Honduras (Gindling and Terrell 2007b) and Costa Rica (Gindling and Terrell 2007a), counter to Acemoglu's (2001) theoretical model. Yet, we have shown in this paper that increases in minimum wages reduce poverty among workers in the large firm sector.…”

Section: Discussionmentioning

confidence: 76%

Minimum Wages, Globalization, and Poverty in Honduras

Gindling

Terrell

2010

World Development

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To be competitive in the global economy, some argue that Latin American countries need to reduce or eliminate labour market regulations such as minimum wage legislation because they constrain job creation and hence increase poverty. On the other hand, minimum wage increases can have a direct positive impact on family income and may therefore help to reduce poverty. We take advantage of a complex minimum wage system in a poor country that has been exposed to the forces of globalization to test whether minimum wages are an effective poverty reduction tool in this environment. We find the net effect of minimum wage increases in Honduras is the reduction of extreme poverty, with an elasticity of -0.18, and all poverty, with an elasticity of -0.10 (using the national poverty lines). These results are driven entirely by the effect on workers in large private sector firms, where minimum wage legislation is enforced. Increases in the minimum do not affect the incidence of poverty among workers in sectors where minimum wages are not enforced (small firms) or do not apply (self-employed and public sector). Hence, we show that minimum wages can be used as a poverty reduction tool in the formal sector. However, we do not endorse minimum wages as the best tool as we have not carried out a complete cost-benefit analysis of this policy vis-à-vis others.

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Section: Discussionmentioning

confidence: 76%

Minimum Wages, Globalization, and Poverty in Honduras

Gindling

Terrell

2010

World Development

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“…In Colombia dis-employment effects were found and these are higher for low-skilled workers (Bell, 1997;Maloney & Nuñez Mendez, 2004). In Costa Rica, increases in minimum wages also decreased employment and reduced hours worked by employees in covered sectors, especially those in the lower half of the skill distribution Terrell, 2004 and2007). Similar results are found in Indonesia, and Trinidad & Tobago (Alatas & Cameron, 2003;Rama, 2001;Suryahadi, Widyanti, Perwira, & Sumarto, 2003;Harrison & Stillman, 2005;Comola & De Mello, 2011, Strobl & Walsh, 2003.…”

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confidence: 70%

Minimum Wages in Sub-Saharan Africa: A Primer

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Although the sectors and fraction of workers covered are small given the low rates of formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers grows wage regulation will become increasingly significant. We find that higher minimum wage values are associated with higher GDP per capita. Importantly, however, we find that the minimum wage relative to the mean wage is higher in low income countries than in lowerand upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world. There is limited research on the employment effect of minimum wages in SSA, but the few findings are consistent with the broad summary of global research. By and large, introducing and raising the minimum wage has a small negative impact or no measurable negative impact. However, there is significant variation around this average finding -the employment elasticities are not constant nor linear. Where increases in a minimum wage are large and immediate, this can result in employment losses, but more modest increases usually have very little observably adverse effects and may have positive impacts on wages. The great variability in findings on employment could be due partly to the great variation in the detail of the minimum wage regimes and schedules country by country, but also by the variations in compliance. We find that higher Kaitz indices are associated with higher levels of non-compliance. The release of country-level earnings and employment data at regular intervals lies at the heart of a future country-focused minimum wage research agenda for Africa. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Minimum Wages in Sub-JEL Classification: J08, J20, J21, J30, J38

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“…Ours is the first study of a developing economy to explicitly show that minimum wages not only result in workers leaving the covered 1 These studies include: Brazil (Lemos, 2009;Neumark, Cunningham and Siga, 2006;Carneiro and Corseuil, 2001;Fajnzylber, 2001), Chile (Montenegro and Pages, 2004); Colombia (Maloney andNunez, 2004, Arango andPanchon, 2004), Costa Rica Terrell, 2005 and2007); Honduras Terrell, 2009 and, Indonesia (Rama, 2001), Kenya (Andalon and Pages, 2008), Mexico (Bosch and Manacorda, 2010;Cunningham and Siga, 2006); Turkey (Ozturk, 2006),Trinidad and Tobago (Strobl and Walsh , 2001), and South Africa (Hertz, 2005). 2 These include studies of the impact of minimum wages in developing economies on: wages and the distribution of wages (Andalon and Pages, 2008;Bosch and Manacorda, 2009;Cunningham, 2007;Hertz, 2005;Lemos, 2009;Maloney and Nunez, 2004;Neumark, Cunningham andSiga, 2006, Stroble andWalsch, 2001;Fanzylber, 2001), employment, unemployment and hours worked (Carneiro and Corseuil, 2001;Terrell, 2007 and2009;Hertz, 2005;Lemos, 2009;Maloney and Nunez, 2004;Montenegro and Pages, 2004;Ozturk, 2006;Rama, 2001), part-time and full-time work (Ozturk, 2006), the formal and informal secto...…”

Section: Introductionmentioning

confidence: 99%

The impact of minimum wages on wages, work and poverty in Nicaragua

Alaniz¹,

Gindling

Terrell

2011

Labour Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu We use an individual-level panel data set to study the impact of changes in legal minimum wages on a host of labor market outcomes in Nicaragua including: a) wages and employment, b) transitions of workers across jobs (in the covered and uncovered sectors) and employment status (unemployment and out of the labor force), and c) transitions into and out of poverty. We find that changes in the legal minimum wage affect only those workers whose initial wage (before the change in minimum wages) is close to the minimum. For example, increases in the legal minimum wage lead to significant increases in the wages and decreases in employment of private covered sector workers who have wages within 20% of the minimum wage before the change, but have no significant impact on wages in other parts of the distribution. The estimates from the employment transition equations suggest that the decrease in covered private sector employment is due to a combination of layoffs and reductions in hiring. Most workers who lose their jobs in the covered private sector as a result of higher legal minimum wages leave the labor force or go into unpaid family work; a smaller proportion find work in the public sector. Our analysis of the relationship between the minimum wage and household income finds: a) increases in legal minimum wages increase the probability that a poor worker's family will move out of poverty, and b) increases in legal minimum wages are more likely to reduce the incidence of poverty if they impact the head of the household rather than the non-head. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S

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The effects of multiple minimum wages throughout the labor market: The case of Costa Rica

Cited by 107 publications

References 28 publications

Minimum Wages, Globalization, and Poverty in Honduras

Minimum Wages, Globalization, and Poverty in Honduras

Minimum Wages in Sub-Saharan Africa: A Primer

The impact of minimum wages on wages, work and poverty in Nicaragua

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