The gender effects of the minimum wage under weak compliance with labour regulations: the case of Bolivia

Abstract

ABSTRACT This paper contributes to the minimum wage (MW) literature by providing new evidence on the gender effects of the MW in the context of weak compliance with labour regulations. We study Bolivia’s case, the country with the highest informal employment share in Latin America according to the International Labour Organization, during a favourable macroeconomic context characterized by a commodities boom that should have eased compliance with an active MW legislation. From a pooled cross-section of household surveys from 2005 to 2013 and a generalized difference-in-difference specification, we find evidence that the MW widened the hourly wage gender gap, and had negative effects on the formalization likelihood. Our findings stress the importance of enforcing compliance with the minimum wage legislation to reduce the gender wage gap.