The Effects of Multiple Minimum Wages Throughout the Labor Market

By T. Gindling, Katherine Terrell. Social Science Research Network, 2004

126 citations recorded by the source corpus.

This paper investigates the effects of legal minimum wages on wages, employment, hours worked and monthly earnings among workers covered by minimum wage legislation as well as those for whom it does not apply (the uncovered sector) in Costa Rica. This country’s large uncovered sector and complex minimum wage policy, which has for decades set numerous wages throughout the wage distribution, provide a stimulating counterpoint to the U.S. framework for the analysis of the impact of minimum wages. We find that legal minimum wages have a significant positive effect on the wages of workers in the covered sector (with an elasticity of 0.10) but no effect on wages of workers in the uncovered sector. We also find that a 10% increase in minimum wages lowers employment in the covered sector by 1.09% and decreases the average number of hours worked of those who remain in the covered sector by about 0.6%. Finally, we show that despite the wide range of minimum wages, the largest impact on the wages and employment of covered sector workers is in the lower half of the distribution.

Subfields: Economics and Econometrics, General Health Professions, Public Administration

View Paper: https://www.semanticscholar.org/paper/b86d2990d06a461805a5b3f816e6edd21f322409

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Citations in the corpus

Labor Regulations, Unions, and Social Protection in Developing Countries: Market distortions or Efficient Institutions? (2009, background): “In 1988 the World Bank initiated studies of labor market adjustments in twelve developing countries (Chile, Argentina, Bolivia, Costa Rica, Brazil; Ghana, Kenya, Egypt, Cote D’Ivoire; and Korea, Malaysia, Thailand).”
How Does Decentralized Minimum Wage Setting Affect Employment and Informality? The Case of Indonesia (2011, background): “Gindling and Terrell (2007) report a negative employment effect in the formal sector, but El Hamidi and Terrell (2002) find a positive employment effect for formalsector workers and no effect for the self-employed on the basis of household survey data, although the authors do not control for other…”
Labor Market Regulations: What Do We Know About Their Impacts in Developing Countries? (2014, unknown): “Examples of research that ﬁnds negative employment effects of increases in the minimum wage include studies for Brazil (Lemos 2004; Fajnzylber 2001; Neumark et al. 2006); Colombia (Bell 1997; Maloney and Nunez Mendez 2004; Arango and Pachon 2004); Trinidad and Tobago (Strobl and Walsh 2003); Indones”
The Impact of Minimum Wages on Wages, Work and Poverty in Nicaragua (2011, unknown): “…Cunningham and Siga, 2006, Stroble and Walsch, 2001; Fanzylber, 2001), employment, unemployment and hours worked (Carneiro and Corseuil, 2001; Gindling and Terrell, 2007 and 2009; Hertz, 2005; Lemos, 2009; Maloney and Nunez, 2004; Montenegro and Pages, 2004; Ozturk, 2006; Rama, 2001),…”
When Does FDI Have Positive Spillovers? Evidence from 17 Emerging Market Economies (2007, background): “21 sector in Honduras (Gindling and Terrell, 2006) and Costa Rica (Gindling and Terrell, 2007).”
Minimum Wage Effects in a Developing Country (2009, background): “For example, the limited evidence for Latin America indicates that the wage compression and employment effects are considerably stronger in developing countries than they are in developed countries (Castillo Freeman and Freeman, 1992; Gindling and Terrell, 2007; Maloney and Mendez, 2004; Montenegro ”