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Do minimum wages reduce employment in developing countries? A survey and exploration of conflicting evidence

David Neumark and Luis Felipe Munguía Corella

World Development, 2021, vol. 137, issue C

Abstract: Evidence from studies of the employment effects of minimum wages in developing countries is mixed. One interpretation is that there is simply no clear evidence of disemployment effects in developing countries. Instead, however, we find evidence that the heterogeneity is systematic, with estimated effects more consistently negative in studies with relatively more features for which institutional factors and the competitive model more strongly predict negative effects. These features include whether studies: (i) focus on vulnerable workers; (ii) use data for the formal sector; (iii) cover countries where minimum wage laws are strongly enforced; and (iv) estimate effects for countries and periods with binding minimum wages.

Keywords: Minimum wage; Employment; Meta-analysis; Competitive model; Institutional factors (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.worlddev.2020.105165

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