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A strategy for development with income redistribution: the minimum wage and growth fronts in Mexico

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  • Beteta, Hugo E.
  • Bielschowsky, Ricardo
  • del Castillo, Miguel
  • Orozco, Roberto
  • Squeff, Gabriel Coelho

Abstract

The purpose of this study is to contribute to the discussion on the viability and potential impact of substantially increasing the pay of the lowest-income workers. To this end, a set of simulations are carried out using the input-output matrix to assess the impact on economic variables of increasing the minimum wage. The analysis yields very favourable indications for the viability of growth with income redistribution in Mexico, based essentially on the domestic mass consumption market. Stimulating growth in demand from the lowest-income households has a favourable impact on GDP and employment and only a relatively small effect on both inflation and imports, which grow by much less than they have with the model that has operated over recent decades.

Suggested Citation

  • Beteta, Hugo E. & Bielschowsky, Ricardo & del Castillo, Miguel & Orozco, Roberto & Squeff, Gabriel Coelho, 2022. "A strategy for development with income redistribution: the minimum wage and growth fronts in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    • Handle: RePEc:ecr:col070:48042
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    8. Sara Lemos, 2004. "The Effect of the Minimum Wage on Prices across Income Levels in Brazil," Discussion Papers in Economics 04/22, Division of Economics, School of Business, University of Leicester.
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