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Hungary (Kertesi and Kollo 2003).<sup>20</sup> However, there are a few examples of studies finding no employment impact (e.g., Bell 1997 for Mexico; Lemos 2007 for Brazil).

Because most jobs are paid at levels well in excess of the minimum wage, it is unrealistic to expect large aggregate employment effects. Researchers are more likely to find significant impacts when they analyze effects on the lower end of the wage distribution where the minimum wage actually “bites” (Brown 1999). The effect can extend beyond workers earning around the minimum wage but it tends to dissipate and eventually disappear farther up the wage distribution. As a result, studies document stronger impacts on certain types of workers who tend to be low-earners than on the labor force at large.

For workers clustered around the minimum wage, positive employment effects have been found (e.g., the Card-Krueger-Katz studies), but most often the effects are negative. Most studies have found that youth or teenage employment is reduced by minimum wage increases (e.g., SMERU 2001; Montenegro and Pagés 2003 for Chile; Arango and Pachon 2004; Neumark and Nizalova 2007 for the U.S.). Consistent with competitive theory, Abowd _et al._ (2000) identified a fall in youth employment in France during the 1980s when real minimum wages were rising and increased youth employment in the U.S. over the same period when the real minimum wage was falling. Employment of women has been found to fall in several cases as a result of minimum wage increases (e.g. Feliciano 1998 for Mexico and Arango and Pachon 2004), although Montenegro and Pagés (2003) identified a shift in employment toward women in Chile. Where researchers have looked at employment impacts of minimum wage increases on the less-skilled, they typically find negative effects (e.g., SMERU 2001; Montenegro and Pagés 2003; Arango and Pachon 2004; Kertesi and Kollo 2003; Bhorat _et al._ 2011 for agricultural workers in South Africa). In general, workers in small firms are most likely to be affected by employment losses due to raises in the minimum wage (Rama 2001; Kertesi and Kollo 2003; Del Carpio _et al._ 2012).

As was noted earlier, conventional interpretations of dual labor market models in developing countries would suggest that increased minimum wages would shift employment from the formal sector to the informal sector. However, the studies that have looked at this question do not yield consistent results. Some do find a decrease in formal employment and an increase in informal employment (e.g., Maloney and Nunez Mendez 2004; Jones 1998 for Ghana). However, Gindling and Terrell (2007) identified no effect on informality in Costa Rica and Fajnzylber (2001) actually found a stronger negative effect of increased minimum wages in Brazil on wage workers in the informal sector than in the formal sector.

In the final analysis, the empirical literature on the employment impacts of the minimum wage does not always confirm the predictions of textbook labor market theories. However, it does indicate that, in most cases, low-wage employment will be reduced when the minimum is increased, although the magnitude of that reduction is often small. An important question, posed by Brown (1999), is why these effects are so modest. One factor, especially relevant in development countries is non-compliance, both because of large informal sectors and weak enforcement in the formal sector. Second, in almost all studies, the labor demand variable is

> 20 An interesting, but rarely studied, question is how the labor supply of other household members adjusts to job loss when it does occur.  One exception is Neumark, Cunningham, and Siga 2006 who found that other household members did increase their participation in the labor force.