Do Minimum Wages Reduce Employment in Developing Countries? A Survey and Exploration of Conflicting Evidence

Produced by: 
National Bureau of Economic Research
Available from: 
November 2019
Paper author(s): 
David Neumark
Luis Felipe Munguia Corella

Evidence from studies of the employment effects of minimum wages in developing countries is mixed. One interpretation is that there is simply no clear evidence of disemployment effects in developing countries. Instead, however, we find evidence that the heterogeneity is systematic, with estimated effects more consistently negative when institutional factors or the competitive model predict more negative effects – for vulnerable workers, in the formal sector, and when minimum wage laws are strong and binding. That is, the evidence points to negative employment effects of minimum wages in developing countries when more features of estimates predict negative employment effects.


Research section: 
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