Minimum Wages in Colombia: Holding the Middle With a Bite on the Poor

Carlos Alberto Arango and Angélica Pachón (angelic_p2@hotmail.com)

Borradores de Economia from Banco de la Republica de Colombia

Abstract: This paper exploits the long history of the minimum wage in a relatively stable developing economy like Colombia in order to see whether it may alleviate the living conditions of low income families and reduce income inequality. The paper does not only explore how the minimum wage may serve these purposes, but also how it may distort market outcomes to do so. We found significant negative minimum wage effects on both the likelihood of being employed and hours worked for all family members, being it stronger for women, and the young and less educated people. We also found a positive effect on non-head participation especialilly in families with low human capial. But, more important, we found evidence that the minimum wage ends up being regressive, improving the living conditions of families in the middle and the upper part of the income distribution with net losses for those at the bottom.

Keywords: Minimum wage; income distribution; income inequality; public policy. (search for similar items in EconPapers)
JEL-codes: J31 J42 J48 O15 O17 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-lab and nep-lam
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:280

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