Minimum Wages, Products and Productivity

Roberto Alvarez and Lucas Navarro

ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business

Abstract: We study the impact of changes in the minimum wage on the creation and destruction of products. Our identification strategy exploits as a quasi-experiment a large and 3-year predetermined increase in minimum wages during 1998-2000 in Chile and the differences in products exposure to these changes. Our results indicate that increases in the minimum wage affect the creation and destruction of products depending on their skills intensity. An annual nominal increase of 10% increases the probability of dropping unskilled labor products in 5 percentage points and reduces the probability of creating unskilled labor products in 3.3 percentage points.

Pages: 41 pages
Date: 2019-03
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