Abstract

ALVARADO PEREZ, René; ORRACA ROMANO, Pedro Paulo  and  CABRERA-HERNANDEZ, Francisco. The effect of doubling the minimum wage on the gender gap in employment and wages in Mexico. El trimestre econ [online]. 2023, vol.90, n.360, pp.961-999.  Epub Feb 19, 2024. ISSN 2448-718X.  https://doi.org/10.20430/ete.v90i360.1777.

This study analyzes the 100% increase in the minimum wage in the northern border area of Mexico in 2019 and its total, gender, and sector effects on employment and wages. Based on data from the National Occupation and Employment Survey, differences-in-differences and event study design models are estimated to calculate the average and dynamic effects of the policy. The results show that the increase in the minimum wage did not statistically affect the probability of participating in the labor market or of being employed; however, among salaried workers, it did increase the probability of working in the formal sector by 1.38 percentage points, where this effect rises to 2.34 percentage points among women and was non-significant among men. Concerning the mean hourly wage, an increase of 3.27% was observed in formal salaried workers and of 3.56% among women, while no significant effects were found within informal salaried workers and men. Along the wage distribution, positive average effects were observed for formal wage earners up to the 50th quantile and among informal wage earners up to the 25th quantile. The increase in the minimum wage affected positively and to a greater extent women and low-wage workers. Moreover, since the wage increase was accompanied by other economic policies that appear to have reduced inflation, the results can be interpreted as an upper bound of the positive effects of the minimum wage in­crease and in the absence of the other policies, or contexts where only the wage increase occurred, its effects on wages could have been smaller.

Keywords : Minimum wage; employment; wage distribution; difference-in-difference models; event study design models.