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

David Neumark, Luis Felipe Munguia Corella

NBER Working Paper No. 26462
Issued in November 2019, Revised in April 2020
NBER Program(s):Development Economics, Labor Studies

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 in studies with relatively more features for which institutional factors and the competitive model more strongly predict negative effects – studies covering vulnerable workers, in the formal sector, when minimum wage laws are strong, and when minimum wages are binding.

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Document Object Identifier (DOI): 10.3386/w26462

 
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