Abstract

MULLER DURAN, Nancy I.  and  OCHOA LEON, Sara M.. Minimum wage and inflation in Mexico. A cost inflation approach. Anál. econ. [online]. 2024, vol.39, n.100, pp.29-47.  Epub Apr 23, 2024. ISSN 2448-6655.  https://doi.org/10.24275/uam/azc/dcsh/ae/2024v39n100/muller.

After the recovery of the minimum wage starting in 2016 and an increase in the price level post COVID-19, it is necessary to study whether this wage rise has affected inflation according to conventional theory. It is argued that recent inflation is not explained by the minimum wage growth but by the increase in imported material costs. To corroborate our hypothesis, a cointegration vector autoregressive model (CVAR) is estimated for the period 2005-2023. The results show that 1) labor costs have not been the cause of inflationary spirals, and 2) there is room to continue with the salary increase without generating pressures on prices. Therefore, an analytical possibility is to study inflation from a perspective of distributional conflict, including business adjustments through rising prices and profits.

Keywords : Minimum wage; Inflation; CVAR.