Distribution effects of the minimum wage in four Latin American countries: Argentina, Brazil, Chile and Uruguay

Abstract

This article provides a comparative analysis of the distribution effects of the increase in the real value of the minimum wage in Latin America during the 2000s in four Latin American countries: Argentina, Brazil, Chile and Uruguay. Using semiparametric techniques to estimate counterfactual density functions, the authors find that the increase in the minimum wage had an equalizing effect in Argentina, Brazil and Uruguay, but not in Chile. This increase accounted for a considerable part of the decline in wage inequality, which was the result of compression at the lower tail of the wage distribution.