the consequences of legal minimum wages in honduras summary minimum wage policies are implemented in most developing countries so understanding their consequences is critical to determine their effectiveness this paper quantifies the labor market and poverty effects of honduran minimum wages from 2005 to 2012 using 13 household surveys as repeated cross sections i estimate the net effects of minimum wage hikes using variation from annual reforms to multiple minimum wages a 60 increase and changes in the number of minimum wage categories evidence shows that employers are partially complying with minimum wage laws and respond to hikes by increasing their level of non compliance higher minimum wages reduce covered formal employment and increase uncovered informal employment formal sector wages increase but greater labor supply in the informal sector leads to a negative net effect on wages this last result is often empirically ambiguous although consistent with the dual sector minimum wage model i find no evidence that minimum wages reduce extreme or moderate poverty

minimum wages for domestic workers impact evaluation of the indian experience abstract what impact does minimum wage legislation have on wages and employment opportunities in an informal sector in a developing country the paper answers this question in the context of minimum wage legislation for domestic workers in india over the period of 2004 2012 combining matching procedure with difference in difference estimation approach supported by extensive robustness checks the paper estimates both the short run and the long run impact of the legislation on real wages and employment results show a positive impact of the legislation on real wages in the shortrun while there is limited evidence of this effect persisting in the long run further the legislation did not seem to have any impact at the extensive margin on the probability of being employed as a domestic worker over short or long run our analysis further reveals that the wages of majority of workers remain below the minimum wage available evidence from the ground in line with theoretical predictions point towards weak enforcement of the legislation as the potential driving factor of observed results as india recently extended national level minimum wage for all workers the paper provides a cautionary tale on the potential pitfalls of implementation of this legislation in informal sector and suggests some ways to overcome the same

in defense of base drift the federal reserve has been criticized for allowing the base from which it calculates its target growth paths for the monetary aggregatesto drift from year to year in response to past deviations from target drift in the base implies that target misses permanently affect the levels of the monetary aggregates using a simple theoretical model this paper shows that the optimal degree of base drift consistent withprice stability depends on the importance of permanent versus transitory income and velocity disturbances neither zero base drift nor complete base drift are likely to be compatible with price stability copyright 1986 by american economic association

the minimum wage as a redistributive tool most analyses of the minimum wage focus on its unintended employment consequences the goal of a minimum wage is not of course to reduce employment but to redistribute earnings to low paid workers under what conditions can a minimum accomplish this are those conditions met in economies which otherwise rely extensively on markets to set wages such as the united states which in i994 rejected mandating health benefits that would have effectively raised the minimum or the united kingdom where in i995 the labour party promised a national minimum upon election who pays for the redistribution who benefits the redistributive effects of a minimum wage depend on the labour market and redistributive system in which it operates on the level of the minimum and on its enforcement at best an effective minimum wage will shift the earnings distribution in favour of the low paid and buttress the bottom tiers of the distribution from erosion at worst minimum wages reduce the share of earnings going to the low paid by displacing many from employment neither outcome is certain so that enacting a minimum is a risky but potentially profitable investment in redistribution it is the balancing of risk against gain that makes a minimum so controversial until the i980s i99os competitive labour markets in the united states and united kingdom produced rising real earnings for the low paid and falling earnings inequality so the risk of enacting a national minimum united kingdom or of raising substantially the national minimum united states seemed unnecessary why interfere with the competitive market when it produces socially desirable trends in earnings albeit a bit slower than one might accomplish with a legislated minimum two decades of falling real wages for lower decile workers in the united states and of rising earnings inequality in the united kingdom1 have however put the minimum back in play the job market is not doing much for lower paid workers in the united kingdom virtually all social groups accept the need for some redistribution though they differ on the best way to accomplish such in the united states pressures for tax cuts can be interpreted as a way for employees to gain real wage increases unavailable through the market the consensus favouring redistribution through the earned income tax credit disappeared in the midi 990s rush to reduce federal budget deficits this paper takes as its operating premise the goal of redistributing earnings

the effects of minimum wages on wage dispersion and employment evidence from the u k wages councils using data on wages council coverage from the united kingdom new earnings survey the authors examine the impact of mandated minimum wages on wage dispersion and employment in the united kingdom in the 1980s they find evidence that a dramatic decline in the toughness of the regulation imposed by the wages councils through the 1980s a decline that is in the level of the minimum wage relative to the average wage significantly contributed to widening wage dispersion over those years there is however no evidence of an increase in employment resulting from the weakening bite of the wages council minimum pay rates instead consistent with the conclusions of several recent u s studies the findings suggest that the minimum wage had either no effect or a positive effect on employment

law and employment lessons from latin america and the caribbean analyzing the effects of regulation and deregulation on latin american labor markets law and employment joins the ongoing debate about the virtues and costs of legislating mandatory benefits for workers of the numerous labor regulations that were altered or created in latin america during the last thirty years many have had unintended and far reaching results nobel prize winning economist james j heckman and carmen pages document the behavior of firms attempting to stay in business and be competitive while facing the high costs of complying with these labor laws they challenge the prevailing view that labor market regulations affect only the distribution of labor incomes and have little or no impact on efficiency or the performance of labor markets this volume shows that mandated benefits reduce employment have a disruptive impact on turnover rates and labor market flexibility promote inequality and discriminate against marginal workers along with in depth studies of colombia peru brazil argentina chile and uruguay law and employment provides comparative analysis from a range of european countries and the united states while also covering important changes in reg

on sustainable growth and collapse optimal and adaptive paths abstract we consider economic growth in the presence of a minimal survival consumption level when preferences are lexicographic giving highest priority to the survival of the current and then all future generations knowledge of production is incomplete so future output made possible by current saving must be estimated the resulting capital accumulation path is compared with the inter temporally optimal one with full knowledge of the production function although previous results with the standard utility function show that for sufficiently strong discounting the adaptive strategy converges to the optimal path in the present case in several scenarios the effect of adaptive economizing under incomplete information is drastic leading to demise of the economy although long run survival would be possible

who gets what from minimum wage hikes a re estimation of card and krueger s distributional analysis in myth and measurement the new economics of the minimum wage i ve studied the arguments and the evidence for and against a minimum wage increase i believe that the weight of the evidence is that a modest increase does not cost jobs and may even lure people into the job market but the most important thing is you can t make a living on 4 25 an hour president clinton state of the union address 1995

interest rate smoothing and price level trend stationarity abstract this paper discusses the definition and mechanics of central bank interest rate smoothing under rational expectations a tension arising between interest rate smoothing and macroeconomic stabilization objectives induces non trend stationary price level and money stock behavior the paper thereby helps explain why such nominal non stationarities are widely observed further implications are drawn for base drift distribution of real returns on long term fixed rate nominal debt and operating characteristics of interest rate pegs and policy instruments

good jobs versus bad jobs this article develops a model of noncompetitive labor markets in which high wage good and low wage bad jobs coexist minimum wages and unemployment benefits shift the composition of employment toward high wage jobs because the composition of jobs in the laissez faire equilibrium is inefficiently biased toward low wage jobs these labor market regulations increase average labor productivity and may improve welfare

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

minimum wages and poverty the principal justification for minimum wage legislation resides in improving the economic condition of low wage workers most previous analyses of the distributional effects of minimum wages have been confined to simulation exercises employing rather restrictive assumptions that guarantee the conclusion that an increase in the minimum wage reduces poverty in contrast we adopt a more flexible reduced form approach that links increases in both federal and state minima to contemporaneous changes in poverty rates for the period 1983 96 we find indication of a poverty reducing effect of minimum wages among older junior high dropouts and among teenagers

monetary policy theory and practice in respect of the theory of monetary policy i am reminded of the comment that jacob viner made many years ago at a meeting of the american economic association about alfred marshall s economics what is new is highly unlikely at this late date also to be true and significant 1 consequently i shall restrict my remarks on theory to trying to summarize what i regard as the present intellectual position

segmentation in the brazilian labor market abstractthis article measures the degree of segmentation in the brazilian labor market controlling for observable and unobservable characteristics workers earn more in the formal sector which supports the segmentation hypothesis we break down the degree of segmentation by socioeconomic attributes to identify the groups where this phenomenon is more prevalent we also investigate the robustness of our findings to the inclusion of self employed individuals

sweatshops economic analysis and exploitation as unfairness the economic and moral defense of sweatshops given by powell and zwolinski j bus ethics 107 449 472 2012 has been criticized in two recent papers coakley and kates j bus ethics 117 553 558 2013 focus on putative weaknesses in the logic of powell s and zwolinski s argument preiss bus ethics quart 24 1 55 82 2014 argues that even granting the validity of their economic argument powell s and zwolinski s defense is without force when viewed from a kantian republican viewpoint we are concerned that sweatshop critics have misinterpreted the economic literature and overstated the conclusions that follow from their ethical premises we show that the best understanding of the current economic literature supports powell s and zwolinski s conclusions about the negative effects of sweatshop wage regulation and that it is unreasonable to reject economic analysis in moral argument against sweatshops even from a kantian perspective additionally we defend the theory of exploitation as unfairness given by wertheimer exploitation 1996 and show how economic analysis can be applied to that theory to identify cases of sweatshop exploitation

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

sugar prices labor income and poverty in brazil this paper assesses the impact that a potential liberalization of sugar regimes in oecd countries could have on household labor income and poverty in brazil the authors first estimate the extent of price transmission from world markets to 11 brazilian states to capture the fact that some local markets may be relatively more isolated from changes in world prices they then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics finally they measure the impact on household income of a 10 percent increase in world sugar prices results suggest that workers in the sugar sector and in sugar producing regions have better employment opportunities and experience larger wage increases more interestingly households at the top of the income distribution experience larger income gains due to higher wages whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment

has the minimum wage policy been important for reducing poverty in brazil a decomposition analysis for the period from 2002 to 2013 abstract this study aims to analyze the contribution of the minimum wage valorization policy to the reduction in poverty that occurred in the first decade of the 21st century in brazil considering not only the incidence of poverty but also its intensity and severity a decomposition methodology was used to isolate the marginal contribution of the minimum wage in the observed changes taking into account the roles of setting the values of basic pension and social assistance benefits the beneficio de prestacao continuada or bpc in addition to setting the wage floor between 2002 and 2013 the minimum wage contributed to a 38 2 reduction in the proportion of impoverished people a 39 4 reduction in the intensity of poverty and 40 6 decrease in the severity of poverty our results also reveal geographic differences with the minimum wage being more important in the poorest regions

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

price level determinacy with an interest rate policy rule and rational expectations abstract this paper reconsiders a result obtained by sargent and wallace namely that price level indeterminacy obtains in their model if the monetary authorities adopt a feedback rule for the interest rate rather than the money stock it is shown that the indeterminacy vanishes if the interest rate rule is chosen so as to have a desired effect on the expected quantity of money demanded this holds even if considerable weight is given in the choice of a rule to the aim of smoothing interest rate fluctuations

heterogeneous effects of imperfectly enforced minimum wages in low wage labor markets abstract we present minimum wage effects across different enforcement regimes exploiting state time variation and policy discontinuities at contiguous districts across state borders in india we show that the effect of minimum wages on wages and employment significantly increases with an increase in enforcement in weak enforcement regimes estimated wage effects are negligible and employment effects are negative or null in stricter regimes wage effects are positive and strong and employment effects are positive or null in most specifications these results are consistent with theories on imperfect enforcement in monopsonistic labor markets and are robust to alternative definitions of enforcement and employment and employing instrumental variables for enforcement

price stability and the ecb s monetary policy strategy abstract this paper focuses on the price stability objective within the framework of the single monetary policy strategy it starts by reviewing what this objective which is common to all central banks means second this paper focuses exclusively on the anchoring of short to medium term inflation expectations part 2 several measures show that this anchoring is effective a two pillar small structural macro economic model framework is used to analyze the impact that this anchoring of expectations has on the determination of the short to medium term inflation rate from this point of view observed inflation in the euro area seems to be in line with the theory and the ecb s action seems to be very effective third we focus on the other aspect of monetary stability the degree of price level uncertainty and the anchoring of inflation expectations in the medium to long term even though this assessment is more difficult than it is in the short to medium term since we only have a track record covering 6 years various indicators from the theoretical analysis paint a fairly reassuring picture of the effectiveness of the device used by the ecb

uma avaliacao dos impactos do salario minimo sobre o nivel de pobreza metropolitana no brasil this paper estimates the impact of recent minimum wage adjustments on poverty level for the six major brazilian metropolitan areas we make a decomposition of the observed variation on poverty level registered for a sample of longitudinal data based on a monthly employment survey pme ibge according to the decomposition we point the share of the observed variation on poverty level due to the wage and ocupational status variation of workers affected by the minimum legislation we break the decomposition in several steps to be able to consider several alternatives of the group of workers affected by the minimum wage legislation we have evidences of significant impacts of minimum wage on poverty level for metropolitan areas the medium elasticity for the period analyzed 1995 1998 was approximately 0 4 when this effect is incorporated which means that in the very short run poverty rises in brazilian metropolitan areas when the value of the minimum wage is increased

minimum wages and household poverty general equilibrium macro micro simulations for south africa summary the poverty reducing effects of minimum wages depend on its effectiveness in targeting the poor and the extent to which job losses and price increases offset income gains we develop a general equilibrium microsimulation model to simulate the economywide effects of minimum wages in south africa we find minimum wages lead to a marginal decline in poverty and overall inequality however job losses are more likely to affect the poorest among minimum wage workers while rising production costs reduce overall household welfare the policy is not an effective anti poverty tool in south africa given poor targeting and adverse price effects which are often unaccounted for in policy simulations

the effects of the minimum wage in brazil on the distribution of family incomes 1996 2001 abstract the brazilian economy has long relied on the minimum wage having first implemented a minimum in 1940 shortly after taking office in 2003 brazil s president raised the minimum wage by 20 and promised to double the value of the minimum wage before his term ends in 2006 the usual rationale for minimum wage increases is to bring about beneficial changes in the income distribution by raising incomes of poor and low income families the goal of this paper is to evaluate the efficacy of the minimum wage in brazil in bringing about these changes in the income distribution we examine data drawn from brazil s major metropolitan areas studying the years after brazil s hyper inflation ended the estimates provide no evidence that minimum wages in brazil lift family incomes at the lower points of the income distribution if anything some of the evidence points to adverse effects on lower income families

least squares learning and business cycles abstract this paper investigates whether the neoclassical growth framework augmented with least squares estimated heuristic rules may reproduce u s business cycles i consider various assumptions about the length of the information set the influence of contemporaneous data on current forecasts and the limit case in which learning is completed calibrated to the u s economy this model may generate endogenous business cycles that do not exist under perfect foresight if random productivity shocks are introduced then the model is more volatile than under rational expectations or constant gain learning and reproduces some key u s business cycles stylized facts

the impact of globalization on the poor in latin america this paper consists of four parts following an introduction section 2 analyzes and describes the main channels transmission mechanisms through which the process of globalization affects poverty directly and indirectly section 3 reviews the major effects of globalization on the latin american economy keeping in mind that few generalizations can be made with much assurance section 4 focuses on 13 case studies of the impact of globalization within different latin american settings undertaken under the auspices of a unu wider project directed by the authors these case studies reveal clearly how the effects of different manifestations of globalization on poverty tend to be context specific in general the main globalization channels appeared not to have been able to reduce overall poverty in the region between 1981 and 2004 growth was anemic and its pattern was not pro poor instead bringing about greater income inequality the transfer of technology tended to benefit the skilled workers and hurt the unskilled the one ray of hope in an otherwise bleak picture consists of the safety nets and social protection schemes implemented in an innovative fashion by some of the larger countries in the region

assessing the effect of payroll taxes on formal employment the case of the 2012 tax reform in colombia in 2013 colombia implemented a tax reform that reduced payroll taxes by a total of 13 5 percentage points of wages this paper evaluates the effects of this component of the 2012 colombian tax reform on firms formal employment and average wages we construct a panel of firms based on their employees administrative records to account for the endogeneity of the treatment we use an instrumental variables technique that exploits the exogenous variation from the decisions of firms that are similar to each other in several dimensions but belong to different economic sectors based on our preferred specification we estimate a positive and significant increase in formal employment as a result of the implementation of the reform of approximately 213 000 jobs in existing pre reform firms in the long run these effects will increase to more than 600 000 jobs the effect of the reform on the average wages paid by firms was also found to be positive for some sizes of firms but the overall effect in the short run is rather small

regional labour informality in colombia and a proposal for a differential minimum wage the very high level of informal labour in colombia is a symptom of the labour market is not functioning properly moreover this undesirable outcome is highly heterogeneous across the country the

do minimum wages fight poverty i introduction one of the most compelling rationales for a national minimum wage floor is to raise the incomes of poor or near poor families with members in the workforce this general point however is often missed in the debates over the merits of a higher minimum wage in contrast to these oft stated distributional goals much of the focus in such debates has been on the employment effects of minimum wages especially among the teenage population in large part this focus is probably attributable to the extensive body of economic research on the effects of minimum wages on employment of low skilled workers however although negative employment effects represent a cost of minimum wages such costs do not necessarily imply that minimum wages constitute bad social policy in particular the employment losses associated with a higher minimum wage may be more than offset by positive effects on low income families especially if minimum wages are a significant factor in helping move families out of poverty 1 this is not to argue that research on employment effects of minimum wages is irrelevant but such research may be more important as a test of the theory of labor demand and as a method of learning how employers and individuals adjust to exogenous wage increases than as a method of assessing the wisdom of the policy in addition we do not mean to suggest that the short run effects of minimum wages on the incomes of poor families should be the sole criterion for evaluating such policies other studies have found evidence suggesting for example that minimum wage increases reduce school enrollment rates and training neumark and wascher 1996a hashimoto 1982 factors that may affect longer run earnings or earnings growth these deleterious longer run effects might offset the benefits of shorter run effects of minimum wages on family incomes nonetheless our perception is that potential increases in the incomes of poor families provide the main motivation for raising the minimum wage making it important to assess the evidence on whether minimum wage increases achieve this goal in this regard there are two questions that pertain to the influence of minimum wages on family incomes generally and on poverty in particular first there is the question of the effects of minimum wages on low wage workers that is do the wage gains received by employed workers more than offset the lost earnings suffered by those who lose or cannot find jobs 2 second there is the question of how minimum wages affect workers in different parts of the family income distribution because many roughly speaking a large minority of minimum wage workers are in relatively affluent families gramlich 1976 card and krueger 1995 burkhauser et al 1996 which workers gain and which lose will have an important influence on the effects of minimum wages on the distribution of family incomes in this article we present evidence on the effects of minimum wages on family incomes focusing in particular but not solely on the effectiveness of minimum wages in reducing poverty using matched march current population surveys cpss we estimate the effects of minimum wages on the probabilities of various transitions in the family income distribution such as transitions into and out of poverty given that federal changes in minimum wages may be confounded with other aggregate level shocks influencing family income we rely heavily on state level changes in minimum wages to identify minimum wage effects in a nutshell our empirical strategy is to compare rates of transition through the family income distribution in states in which minimum wages do and do not increase for example if poor families are more likely to escape from poverty when minimum wages increase in their states of residence we would infer that minimum wage hikes help families move out of poverty on the other hand if transitions in to poverty are more common when minimum wages increase we would infer that the disemployment effects of minimum wages play a dominant role among the low income population

the effects of minimum wages on the distribution of family incomes a nonparametric analysis an oft stated goal of the minimum wage is to raise incomes of poor or low income families we present nonparametric estimates of the effects of minimum wages on the distribution of family income relative to needs in the united states although minimum wages increase the incomes of some poor families the evidence indicates that their overall net effect is if anything to increase the proportions of families with incomes below or near the poverty line it would appear that reductions in the proportions of families that are poor or near poor should not be counted among the potential benefits of minimum wages

anticipated effects of the minimum wage on prices there is little empirical evidence on the effect of minimum wage increases on prices particularly for developing countries this paper provides estimates of this effect using monthly brazilian household and firm data over 18 years as minimum wage increases in brazil sare large and frequent they have a potentially important impact on aggregate prices rational agents in anticipation of such price effects may take minimum wage increases as a signal for future price and wage bargains we find that the minimum wage raises overall prices not only on the month of the increase but also in the two months prior to the change as well as after the change

minimum wages globalization and poverty in honduras summary we test whether minimum wage legislation is an effective poverty reduction tool in a poor country trying to stay competitive in the global economy in honduras increases in relatively high minimum wages lead to reductions in poverty especially extreme poverty however the impact is felt only in households with workers in large firms and felt more strongly among those with low wage workers increases in the minimum do not affect poverty in sectors where minimum wages are not enforced or do not apply hence minimum wages can be a poverty reduction tool in the formal sector which competes globally

age differentiated minimum wages in developing countries abstract the fact that minimum wages seem especially binding for young workers has led some countries to adopt age differentiated minimum wages we develop a dynamic competitive two sector labor market model where workers with heterogeneous initial skills gain productivity through experience we compare two equally binding schemes of single and age differentiated minimum wages and find that although differentiated minimum wages result in a more equal distribution of income such a scheme creates a more unequal distribution of wealth by forcing less skilled workers to remain longer in the uncovered sector we also show that relaxing minimum wage solely for young workers reduces youth unemployment but harms the less skilled ones

a family production overlapping generations economy abstract this paper provides a theoretical analysis of an overlapping generations economy in which production decisions and input output allocations are all carried out at the family level i consider a single class of output allocation schemes and various degrees of knowledge about the production technology under complete knowledge i show that a family organizational structure in which everyone receives his marginal contribution to output invests less in physical capital than under a perfectly competitive equilibrium environment under incomplete knowledge i analyze and compare how beliefs about the input output relationship affect the physical capital accumulation dynamics and the long run standards of living

monetary policies in interdependent economies an open economy explanation for base drift and price level non trend stationarities abstract most nations have experienced base drift of their money stocks and associated price level non trend stationarities recent explanations for this fact have emphasized tensions among various possible objectives of central banks in closed economy or small open economy frameworks in contrast this paper explores structural and policy interdependence among economies as an explanation for price level non trend stationarities it demonstrates that such interdependence can induce central banks to follow non trend stationary policies even if they desire only to smooth prices in their home economies

tracing the impact of large minimum wage changes on household welfare in indonesia abstract minimum wage legislation has been introduced and expanded in many developed and developing countries in the hope that it would improve the living standards of the poor and reduce inequality this study examines the impact of large minimum wage changes in indonesia the results indicate serious limitations of the minimum wage for improving living standards and reducing inequality

estimating the impact of minimum wages on employment wages and non wage benefits the case of agriculture in south africa assessments of the impact of minimum wages on labor market outcomes in africa are relatively rare in part this is because the available data do not permit adequate treatment of econometric issues that arise in such assessments this paper however attempts to estimate the impact of introducing a minimum wage law in the agriculture sector in south africa based on 15 waves of the biannual labor force survey conducted between september 2000 and september 2007 the chosen sample includes six waves before the legislation s effective date march 2003 and nine afterwards to assess whether the changes experienced by farm workers are unique we identify a control group that has similar characteristics to the treatment group our econometric approach involves using two alternative specifications of a difference in differences model we test whether employers reduced employment and whether they responded at the intensive margin by reducing hours of work the results suggest a significant employment reduction in agriculture from the minimum wage and particularly a noticeable move away from employment of part time workers an increase in wages on average and a rise in non wage benefits compliance our analysis also indicates that firstly overall average of hours worked fell in the post law period suggesting that employers adjusted to some extent on the intensive margin secondly it appears that hours of work increased more in areas where wages were lower in the pre law period driven largely by the fall in part time employment

minimum wage impacts on wages and hours worked of low income workers in ecuador abstract minimum wage policy aims to raise the real income of low wage workers low wage individuals may be adversely affected by minimum wages however although the empirical evidence on this point is not without controversy we analyzed the effects of the january 2012 increase in monthly minimum wages on the wages and hours worked of low wage workers in ecuador individuals could have chosen to enter occupations covered by minimum wage legislation or those that were not we applied a difference in differences estimation to account for potential self selection bias we also relied on exogenous variations in minimum wages by sector industry and occupation we constructed individual panel data from a household panel and performed estimates that also accounted for potential sample selection bias the results suggest a significant and positive effect on the wages of treated workers increasing them by 0 41 0 48 for each 1 increase in minimum wages relative to the earnings of control workers our results also suggest that effects varied by type of worker i women workers received lower wage increases and their hours worked were significantly and negatively affected both of which may suggest a failure of the minimum wage to reduce the gender wage gap at the bottom of the distribution and ii the hours worked by young workers were significantly and positively affected a result that is in agreement with results found elsewhere in the literature these results persisted after applying robustness checks to account for different control groups full vs part time jobs separate regressions for heterogeneous groups and tests for potential attrition and sample selection bias the range of effects observed across disparate groups of workers suggests areas in which policy change could be useful the income compression effect we found suggests that further studies should address the effects of minimum wage on the drop in income inequality observed in the data