The Impact of Minimum Wage and Labor-Intensive Businesses on Corporate Investment in Latin America

In Latin America, minimum wage policies are crucial amid high social inequality and economic challenges. Governments have pursued real wage increases during upswings such as commodity booms, yet little research examines their impact on local firms’ investments. This study addresses that gap by analyzing 3,142 non-financial firms in Argentina, Brazil, Chile, Colombia, Jamaica, Peru, and Mexico. Using multilevel linear regression, it explores relationships across time, firm, industry, and country levels. Findings reveal that as minimum wages rise, firms increase investments in tangible assets. These results are pivotal for policymakers designing inclusive wage strategies and for firms optimizing strategic investment planning.