Graduation Year

2025

Date of Submission

12-2024

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Second Department

Mathematics

Reader 1

Serkan Ozbeklik

Reader 2

Jessamyn Schaller

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2024 Isabella Cardenas Padilla

Abstract

This thesis analyzes the 2019 minimum wage reform in Mexico, evaluating its impact on female labor market outcomes, including labor force participation, formal employment, and informal employment. This reform introduced a new geographic minimum wage zone along municipalities bordering the United States, accompanied by fiscal incentives, creating a natural experiment for analysis. Using difference-in-differences regression specifications, the study finds that the minimum wage increase was associated with a rise in formal sector employment and a corresponding decline in informal employment among women with low educational attainment. This study finds a magnitude of 6 percentage points in each direction, an economically significant effect, which confirms and expands earlier findings from Viveros (2018) that a 2012 minimum wage increase led to a decline in informal employment. No significant effects were observed for women with higher levels of education, suggesting that the changes were predominantly driven by the minimum wage policy rather than the fiscal interventions. The findings challenge predictions from dual labor market theory, as the reform did not produce adverse effects on formal employment. These results contribute to the broader understanding of minimum wage policies in developing economies and their role in shaping labor market dynamics for women, especially in settings with a large informal labor force.

Share

COinS