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

Enrique Alaniz, Thomas (Tim) Gindling and Katherine Terrell

Labour Economics, 2011, vol. 18, issue S1, S45-S59

Abstract: In this paper we use an individual- and household-level panel data set to study the impact of changes in legal minimum wages on a host of labor market outcomes 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. We find no evidence that these workers become unemployed.

Keywords: Minimum wages; Employment; Poverty (search for similar items in EconPapers)
JEL-codes: J3 O17 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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Working Paper: The Impact of Minimum Wages on Wages, Work and Poverty in Nicaragua (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:18:y:2011:i:s1:p:s45-s59

DOI: 10.1016/j.labeco.2011.06.010

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