findings:decreased income inequality through significant increase on income of low-wage earners; larger effect for agricultural workers, smaller for women; potentially negative impact on income of high-earners
findings:significant effect on hours worked; no significant spillover effect on workers in control group; significant negative impact on female hours worked
channels:possibly decreased intensive margin for female workers; affecting lower income increase of women
direction:1# -1 neg / 0 none / 1 pos
significance:0# 0 nsg / 1 msg / 2 sg
notes:
annotation:|
A study looking at the impacts of minimum wage increases in Ecuador specifically on the income and hours worked of low-wage earners.
It finds that, generally, there was a significant increase on the income of low-wage earners and also a significant increase on wage workers hours worked which would reflect positively on a decrease in the country's income inequality.
At the same time, it finds some potential negative effects on the income of high earners, suggesting an income-compression effect as employers freeze or reduce high-earners wages to offset low-earners new floors.
The findings hide internal heterogeneity, however:
For income the effect is largest for agricultural workers while for women the effect is significantly smaller than overall affected workers.
For hours worked there is a significant negative impact on women's hours worked, a fact which may point to a decreased intensive margin for female workers and thus also affect their lower income increases.
Limitations of the study include some sort-dependency in their panel data and only being able to account for effects during a period of economic growth.
