Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273669 
Year of Publication: 
2022
Series/Report no.: 
Working Papers No. 2022-13
Publisher: 
Banco de México, Ciudad de México
Abstract: 
In January 2019, the authorities increased the minimum wage and decreased the valueadded tax (VAT) in an effort to boost activity on the northern Mexican border. In this paper we estimate the effects of both policies on prices. We find that the upward pressures on prices due to the minimum wage hike were more than offset by the downward pressures associated with the VAT. In the absence of the VAT reduction policy, average prices in the northern Mexican border would have been higher. We estimate that the effects of the minimum wage on prices tended to be smaller for goods or services produced with a larger share of informal labor.
Subjects: 
Minimum wage
Value-Added Tax
Prices
JEL: 
J38
J46
H20
Document Type: 
Working Paper
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