PMMA-12808 Minimum wage policies: wage, employment, and distributional impacts in Ecuador

Abstract

The minimum wage policy in Ecuador aims to raise the real income of low-wage workers. We analyze the effects of the January 2012 increase in minimum wages on wages and hours worked of low-wage workers. Individuals may select themselves into the occupations of the groups of workers who are covered by the minimum wage legislation, or into those who are not. We apply a difference-in-differences estimation as an identification strategy to account for selection on unobservable. We construct individual panel data from a household panel. The main results suggest a significant and positive effect of the minimum wage increase on the wages of affected workers, increasing their wages by 0.41% to 0.48% for each 1% increase in minimum wages, relative to the earnings of unaffected workers. Results from hours worked highlight several variables that should be accounted for to find significant and sensible estimations that differentiate between full time work and other heterogeneous effects on the treated group.

Members

Project leader: Sara Wong

Project researchers: Sara Wong | Juan Jose Salcedo Cruz | Yael Negrete | Danny Veliz

Scientific mentors: Jorge Davalos

Journal publication

Authors	Co-Authors	Title of paper	Title of Economic Review	Bibliographic references
Sara A. Wong		Minimum wage impacts on wages and hours worked of low-income workers in Ecuador	World Development	Volume 116, April 2019, pp. 77-99

Working Papers

	Title	Modified	Size	Comments	Recommendations
	Minimum wage impacts on wages and hours worked of low-income workers in Ecuador	2017-03-08	4635.22KB	0	0

Policy Briefs

	Title	Modified	Size	Comments	Recommendations
	Impact of minimum wage policies in Ecuador	2016-10-27	470.4KB	0	0

Final report

	Title	Modified	Size	Comments	Recommendations
		2016-09-02	699.58KB	0	1

Proposal

	Title	Modified	Size	Comments	Recommendations
		2015-04-30	1413.08KB	2	1