The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica
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.
KeywordsMinimum Wage Informal Sector Average Wage Wage Inequality Percentage Point Increase
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