The Minimum Wage in Formal and Informal Sectors: Evidence from an Inflation Shock in Colombia (R&R, World Development)
Listed in Banco de Mexico Research Papers
I estimate the effect of the minimum wage on formal wages, informal wages, and employment in Colombia. I exploit an unexpected increase in the real minimum wage during the 1999 Colombian economic crisis to estimate short- term effects of the minimum wage along the distribution of wages in both sectors. I find evidence of wage responses, with a stronger incidence in the formal sector.