Minimum Wages, Inequality and Globalization

Thomas (Tim) Gindling and Katherine Terrell

No 1160, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper contributes to our understanding of the impact of institutions on incomes of workers in developing countries by rigorously addressing the question as to whether changes in minimum wages can change the inequality of the distribution of earnings. More specifically, we analyze whether changes in Costa Rica’s complex institution of multiple minimum wages in the 1980s and 1990s acted as a countervailing force to the unequalizing effect of globalization. Using annual data on workers from the 1987-1997 household surveys, it is shown that changes in the legal minimum wages did indeed have an effect on wage inequality and that these changes would not have been captured using the simple interpretation of minimum wages found in much of the literature.

Keywords: wages; employment; minimum wages; Costa Rica (search for similar items in EconPapers)
JEL-codes: J23 J31 J38 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2004-05
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (4)

Published - published in: Michigan Journal of International Law, 2004, 26(1), 245-269

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