Economics, Econometrics and Finance
4 years ago

Honduran minimum wage hikes lead to increased informal employment and lower wages.

World Development
The Consequences of Legal Minimum Wages in Honduras
Andrés Ham

Paper Summary

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Minimum wage hikes in Honduras from 2005 to 2012 led to employers not fully following the laws, resulting in more informal jobs and less formal employment. While wages in the formal sector increased, the overall effect on wages was negative due to more people entering the informal sector. However, these minimum wage increases did not reduce poverty levels in the country.