Central Data Catalog

Citation Information

Type Working Paper
Title Revisiting the Effects of Minimum Wages in Developing Countries: Evidence from a Particular Policy Change in Honduras
Author(s)
Publication (Day/Month/Year) 2013
URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2217835
Abstract
This paper exploits a recent policy change in Honduras to study the effects of the minimum wage in a dual labor market. Using a large individual data set, I propose using this policy as a natural experiment to obtain estimates of its impact on formal and informal workers’ earnings. The main results indicate positive effects for formal workers and find significant evidence of a short-lived lighthouse effect on informal employees. In distributive terms, the minimum wage markedly reduced poverty among the employed since the increase mostly affected low earning formal workers and higher paid informal workers; suggesting that this last group constitutes the beneficiaries of the spillover.

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