In this chapter reviews the literature and inform policy debates about the effects of minimum wages (MW) on income inequality in Latin America and the Caribbean (LAC).

We document changes in income and earnings inequality in the five Central American countries from the early 1990s to 2009. In the 1990s Costa Rica had the most equal distribution of income in Central America, and one of the most equal distributions of income in Latin America. At the other...

In August 2010 the Costa Rican government implemented a comprehensive program to increase compliance with legal minimum wages, the Campaign for Minimum Wages. To evaluate the impact of the Campaign, we use a regression discontinuity approach, which compares what happened to workers who before...

We study the labour market dynamics of men and women in El Salvador and Nicaragua, focusing on the factors that help men and women move into an advantageous labour market state from an unfavourable state. We consider 'advantageous' states to be formal salaried employees and self-employed workers...

We divide workers into six work statuses: formal self-employed, upper-tier informal self-employed, lower-tier informal self-employed, formal wage-employed, upper-tier informal wage-employed, and lower-tier informal wage-employed. In both Costa Rica and Nicaragua, earnings are highest for formal...

Informal work is often considered a place of employment for marginalized and vulnerable workers who have been rationed out of preferred formal work. However, informality can also be seen as a dynamic sector that budding entrepreneurs and those looking for flexible working conditions enter...

We use a matched firm-employee data set to examine the extent of compliance with minimum wage and overtime pay regulations in Chinese formal sector firms. We find evidence that there is broad compliance with legal minimum wages in China; fewer than 3.5% of full-time workers earn less than the...

Using a range of countries from the Global South, this book examines heterogeneity within informal work by applying a common conceptual framework and empirical methodology. The country studies use panel data to study the dynamics of worker transitions between formal and heterogeneous, informal...

The dual economy development models hold minimum wages (among other institutions) accountable for persistent dualism. We use 12 years of micro data on thousands workers in Costa Rica to test whether legal minimum wages have a differential impact on wages in the formal sector vs. informal sector,...

This paper investigates the effects of legal minimum wages on wages, employment, hours worked and monthly earnings among workers covered by minimum wage legislation as well as those for whom it does not apply (the uncovered sector) in Costa Rica. This country?s large uncovered sector and complex...