Advertisement

The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica

  • Fatma El-Hamidi
  • Katherine Terrell
Part of the International Economic Association Series book series (IEA)

Abstract

Minimum wage policies have always been controversial among economists and policy-makers and the debate has become more heated following the publication of the book by Card and Krueger (1995) and related papers (e.g. Katz and Krueger (1992), Card and Krueger (1994)). Supporters of minimum wages justify them as a way of improving the living conditions of the poor, unskilled, and unorganized workers. Critics emphasize the efficiency losses associated with their use, and disqualify them as an adequate way of affecting inequality. They argue that in developing countries minimum wages are the principal source of labour market segmentation and unemployment.

Keywords

Minimum Wage Informal Sector Average Wage Wage Inequality Percentage Point Increase 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Bell, L. (1997) ‘The Impact of Minimum Wages in Mexico and Colombia’, Journal of Labor Economics, vol. 15, pp. S102-S134.Google Scholar
  2. Brown, C. (1999) ‘Minimum Wages, Employment, and the Distribution of Income’, in O. Ashenfelter and B. Card (eds) Handbook of Labor Economics (Amsterdam: Elsevier), pp. 2101–63.Google Scholar
  3. Card, D. and A. B. Krueger (1994) ‘Minimum Wages and Employment: A Study of the Fast-Food Industry in New Jersey and Pennsylvania’, American Economic Review, vol. 84, pp. 772–93.Google Scholar
  4. Card, D. and A. B. Krueger (1995) Myth and Measurement: The New Economics of the Minimum Wage (Princeton: Princeton University Press).Google Scholar
  5. Coulter, A. Fiona, A. E., F. A. Cowell and S. P. Jenkins (1992) ‘Differences in Needs and Assessment of Income Distribution’, Bulletin of Economic Research, vol. 44, no. 2, pp. 77–124.CrossRefGoogle Scholar
  6. de Villarreal, N. S. and R. S. Breach (1988) ‘Evaluation of the Impact of Minimum Wages on the Mexican Economy’, in Assessing the Impact of Statutory Minimum Wages in Developing Countries: Four Country Studies (Geneva: International Labour Organization).Google Scholar
  7. Dickens, R., S. Machin and A. Manning (1999) ‘The Effects of Minimum Wages on Employment: Theory and Evidence from Britain’, Journal of Labour Economics, vol. 17, no. 1, pp. 1–22.CrossRefGoogle Scholar
  8. Drobny, A. and J. Wells (1983) ‘Wages, Minimum Wages, and Income Distribution in Brazil’, Journal of Development Economics, vol. 13, pp. 305–30.CrossRefGoogle Scholar
  9. Fiszbein, A. (1992) ‘Do Workers in the Informal Sector Benefit from Cuts in the Minimum Wage?’, World Bank Policy Research Working Paper, no. 826.Google Scholar
  10. Freeman, R. B. (1996) ‘The Minimum Wage as a Redistributive Tool’, Economic Journal, vol. 106, pp. 639–49.CrossRefGoogle Scholar
  11. Katz, L. and A. Krueger (1992) ‘The Effect of the Minimum Wage on the Fast Food Industry’, Industrial and Labour Relations Review, vol. 46, pp. 6–21.CrossRefGoogle Scholar
  12. Machin, S. and A. Manning (1996) ‘The Effects of Minimum Wages on Wage Dispersion and Employment’, Industrial and Labour Relations Review, vol. 47, pp. 319–29.CrossRefGoogle Scholar
  13. Rebitzer, J. and L. Taylor (1995) ‘The Consequences of Minimum Wage Laws Some: New Theoretical Ideas’, Journal of Public Economics, vol. 56, pp. 245–55.CrossRefGoogle Scholar
  14. South African Team for Employment Promotion (SATEP)-ILO (1988) ‘Minimum Wage Fixing in Botswana: Implications for Employment and Income Distribution’, in Assessing the Impact of Statutory Minimum Wages in Developing Countries: Four Country Studies (Geneva: International Labour Organization).Google Scholar

Copyright information

© International Economic Association 2002

Authors and Affiliations

  • Fatma El-Hamidi
    • 1
  • Katherine Terrell
    • 2
  1. 1.University of PittsburghUSA
  2. 2.Business School and William Davidson InstituteUniversity of MichiganUSA

Personalised recommendations