cite: Wong2019
author: Wong, S. A.
year: 2019
title: "Minimum wage impacts on wages and hours worked of low-income workers in Ecuador"
publisher: World Development
uri: https://doi.org/10.1016/j.worlddev.2018.12.004
pubtype: article
discipline: development

country: Ecuador
period: 2011-2014
maxlength: 12
targeting: implicit
group: wage workers
data: national employment survey (ENEMDU)

design: quasi-experimental
method: difference-in-difference approach
sample: 1_624_422
unit: individual
representativeness: national, census
causal: 1 # 0 correlation / 1 causal

theory:
limitations: some small sort-dependency in panel data; can only account for effects in period of economic growth
observation:
  - intervention: minimum wage
    institutional: 1
    structural: 1
    agency: 0
    inequality: income; gender
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: Gini coeff
    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
    channels: income-compression effect
    direction: -1 # -1 neg / 0 none / 1 pos
    significance: 2 # 0 nsg / 1 msg / 2 sg
  - intervention: minimum wage
    institutional: 1
    structural: 1
    agency: 0
    inequality: income; gender
    type: 0 # 0 vertical / 1 horizontal
    indicator: 0 # 0 absolute / 1 relative
    measures: hours worked
    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.