Does increasing the minimum wage reduce poverty in developing countries?

Produced by: 
Institute for the Study of Labor (IZA)
Available from: 
May 2014
Paper author(s): 
Tim H. Gindling (University of Maryland and IZA)
Topic: 
Labor
Year: 
2014

Raising the minimum wage reduces poverty in most developing countries. But the impact is modest because the legal minimum wage applies to only a minority of poor workers; in particular, it does not cover workers in the large informal sector. And raising the minimum wage creates losers as well as winners among poor households—depending on employment effects, wage distribution, and effects on the household head—pulling some out of poverty while pushing others in. Raising the minimum wage could be part of a comprehensive poverty-reduction package but should not be  the only, or even the main, tool to reduce poverty.

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