Minimum wage policy and inequality in Latin America and the Caribbean

We review the minimum wages (MWs) literature with a special focus on: (i) the impacts of MW on inequality; (ii) and the importance of labor law enforcement and compliance. We provide novel descriptive data about the actors and institutions fixing and enforcing MWs in the region integrating the labor politics and labor economics literatures. Our interpretation of the evidence is that setting an ambitiously high MW, and/or turning a blind eye to wage theft, is likely to produce labor informality and higher inequality. MW policy should avoid both extremes (i.e. neither too low, nor too high) to achieve positive outcomes.