EconPapers    
Economics at your fingertips  
 

A Minimum Wage Increase Can Have an Adverse Distributional Impact:The case of Colombia

Diego Angel-Urdinola

Archivos de Economía from Departamento Nacional de Planeación

Abstract: A rise in the minimum wage may contribute to decrease earnings inequality by promoting larger wage increases for workers in the low tail of the wage distribution, but it may also increase inequality by promoting layoffs. This paper uses a semiparametric model to analyze the impact on inequality of a 6.3 percent increase in the real minimum wage in Colombia between 1995 and 1999, a period of economic downturn. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying policy would contribute to reduce earnings inequality. On the contrary, by considering the drop in wages of those who lost their jobs, simulations suggest that the policy in question would increase earnings inequality under some assumptions about the employment elasticity of the minimum wage and the new level of earnings unemployed workers rely upon.

Keywords: Salario; Mínimo (search for similar items in EconPapers)
Date: 2004-03-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://colaboracion.dnp.gov.co/CDT/Estudios%20Econmicos/247.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000118:001922

Access Statistics for this paper

More papers in Archivos de Economía from Departamento Nacional de Planeación
Bibliographic data for series maintained by Bricelda Delgado Martínez (). This e-mail address is bad, please contact .

 
Page updated 2019-06-05
Handle: RePEc:col:000118:001922