Abstract

ARANGO, Carlos A  and  PACHON, Angélica. The Minimum Wage in Colombia 1984 -2001:Favoring the Middle Class with a Bite on the Poor . Ens. polit. econ. [online]. 2007, vol.25, n.55, pp.148-193. ISSN 0120-4483.

This paper exploits the long history of the minimum wage in Colombia in order to see whether it has im-proved the living conditions of low income families and reduced income inequality. This paper also explores how the minimum wage may have distorted market outcomes in the process. We find significant negative minimum wage effects on both the likeli-hood of being employed and hours worked among household heads. The negative effect is strongest for women, the young and less educated people. For non-head household members, we fi nd that a rise in the minimum wage signifi cantly increases labor participation, reduces hours worked, and increases the likelihood of being unemployed. Most impor-tantly, we fi nd evidence that the minimum wage ends up being regressive, improving the living con-ditions of families in the middle and the upper parts of the income distribution but causing net losses for those at the bottom.

Keywords : minimum wage; income distribution; income inequality; poverty alleviation.

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