Minimum Wages: Inequality and Development

Abstract

It analyzes the evolution of the minimum wages in Mexico during the last decades andshows its impact on growth and employment. It is noted that around 40% of the Mexicanpopulation is in such conditions of poverty for employment reasons, the authorshows how the fall of the minimum wage has been parallel with the set of wages.This is reflected in the concentration of income and its distribution. Therefore arguesthat the minimum wage had been an indicator of how they moved the whole of thewage structure: its increase stimulates a growing economy, while its fall generates aneconomy in crisis. Maintain depressed the minimum wage has deepened the gaps inwages and inequality. He therefore suggested a change in the wage policy, becauseit might induce a new dynamic in which a growth of domestic demand increase productivityand levels of employment and income. Such a strategy would allow a greaterwell-being and a real reduction in poverty and inequality; and this could dampen positivelyin the standard of living of the workers.