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The impact of the minimum wage on the destruction and creation of products

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dc.creator Álvarez, Roberto
dc.creator Navarro, Lucas
dc.date 2018-01-11T20:50:26Z
dc.date 2018-01-11T20:50:26Z
dc.date 2017-12-06
dc.date.accessioned 2018-01-13T00:00:30Z
dc.date.available 2018-01-13T00:00:30Z
dc.date.issued 2018-01-13
dc.identifier http://scioteca.caf.com/handle/123456789/1150
dc.identifier.uri http://scioteca.caf.com/handle/123456789/1150
dc.description We study the impact of changes in the legal minimum wage on the creation and destruction of products at the firm level. This can be a relevant way for increasing firm productivity and for explaining why the raises in the minimum wage may have minor effects on employment. Our identification strategy exploits as a quasi-experiment a large and 3-year predetermined increase in minimum wages during 1998-2000 in Chile and the differences in products exposure to these changes. Our main results indicate that increases in the minimum wage raise the destruction of products that are more unskilled labor–intensive and that augments the introduction of products that are more intensive in skilled workers. The impact is economically relevant. An annual nominal increase of about 10% in the minimum wage as occurred in this period increases the probability of dropping unskilled labor products in 5 percentage points and reduce the probability of creating unskilled labor products in 3.3 percentage points. Our results are robust to sample selection issues, to the introduction of controls for potential confounding factors and to the consideration of alternative definitions of exposure.
dc.language en
dc.publisher CAF
dc.publisher Santiago de Chile
dc.relation Working paper;N° 2018/02
dc.rights CC-BY-NC
dc.rights http://creativecommons.org/licenses/by-nc/4.0/
dc.subject Desarrollo
dc.subject Economía
dc.subject Finanzas públicas
dc.subject Investigación socioeconómica
dc.subject Trabajo y protección social
dc.title The impact of the minimum wage on the destruction and creation of products
dc.type workingPaper
dc.coverage América del sur


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