Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence

Mariano Bosch and Marco Manacorda ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper explores the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980 and the late 1990s. In contrast to the view that sees minimum wages as an ineffective redistributive tool in developing countries, we find that the deterioration in the real bite of the minimum wage is responsible for the entire rise in inequality at the bottom of the distribution. Our result challenges the widespread perception that trade induced shocks are the single most important factor behind the recent rise in earnings inequality in several less developed economies.

Keywords: Minimum Wage; Inequality; Informality; Mexico (search for similar items in EconPapers)
JEL-codes: O15 O17 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-dev and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Minimum wages and earnings inequality in urban Mexico. Revisiting the evidence (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0880

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