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Begin New Search Topic Minimum Wage Political Geography Latin America

1. Minimum Wages and Skill Premiums: Evidence for Latin America

Author:
Lucía Ramírez Leira, Octavio Bertín, and Leonardo Gasparini
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper analyzes the effect of the minimum wage on skill premiums in Latin America over the period 1997–2019. The canonical labor market model is extended to include the role of the minimum wage, following the approach proposed by Vogel (2023). Skill premiums are estimated through Two-Way Fixed Effects (TWFE) regressions using harmonized household survey microdata from 14 Latin American countries. Results suggest that increases in the minimum wage are associated with reductions in the skill premium between workers with and without higher education, but do not appear to have a significant effect on the gap between workers with medium and low levels of education. The largest effect of the minimum wage is observed for workers with higher levels of labor market experience. These findings contribute to recent evidence highlighting the role of labor institutions as one of the main drivers of the reduction in inequality in Latin America since the early 2000s.
Topic:
Economics, Inequality, Skilled Labor, Minimum Wage, and Wages
Political Geography:
Latin America

2. Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies

Author:
Carlo Lombardo, Lucía Ramírez-Leira, and Leonardo Gasparini
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin America’s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We find evidence that the MW has a compression effect on the wage distribution of formal workers. The effect was particularly large during the 2000s, a decade of sustained growth and strong labor markets. In contrast, the effect seems to vanish in the 2010s, a decade of much weaker labor markets. We also find suggestive evidence of a lighthouse effect: the MW seems to have an equalizing effect also on the wage distribution of informal workers.
Topic:
Income Inequality, Economy, Labor Market, Minimum Wage, and Informal Economy
Political Geography:
South America and Latin America