Close the Distance: The Effect of the Minimum Wage on the Gender Wage Gap in Mexico

Published:

With Eugenio Gonzalez Flores and Emilio Gutiérrez

This paper estimates the effect of a change in the minimum wage on the gender wage gap in Mexico. We exploit an increase in the minimum wage on the northern Mexican border of 100\% in January 2019. We use a triple difference model to compare the wages of men and women, on the northern border and the rest of the country, before and after the policy change. We find that women’s daily wages increased between 0.9 and 1.7 log points more than men’s in the northern border because of the minimum wage increase, without overall differences in the evolution of formal sector employment across genders. These effects imply a 7 to 13\% reduction in the gender wage gap. Most of the effect on wages appears in sectors with higher gender wage gaps and low-wage workers.