The effect of doubling the minimum wage on employment and earnings in Mexico

In January 2019, Mexico doubled the minimum wage in municipalities that share a border with the United States. We use the universe of workers that were formally employed in the Mexican private sector in the third quarter of 2018 (19.6 million) and track their labor history from 2015Q1 through 2021Q1...

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Bibliographic Details
Published inEconomics letters Vol. 209; p. 110124
Main Authors Campos-Vazquez, Raymundo M., Esquivel, Gerardo
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.12.2021
Elsevier Science Ltd
Subjects
Earnings
Employment
Impact analysis
Labor history
Labor market
Mexico
Minimum wage
Private sector
Universe
Mexico
J20
Mexico
Minimum wage
Employment
J30
O54
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Summary:In January 2019, Mexico doubled the minimum wage in municipalities that share a border with the United States. We use the universe of workers that were formally employed in the Mexican private sector in the third quarter of 2018 (19.6 million) and track their labor history from 2015Q1 through 2021Q1. Using a synthetic control approach, we find no significant effect on employment and a positive and significant impact on earnings, especially at the bottom of the wage distribution. •We create a longitudinal database with the universe of formal sector workers.•We track the pre- and post-employment history of all those employed in 2018Q3.•We find no significant employment effects for any wage group.•We find significant effects on earnings at the bottom of the wage distribution.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2021.110124