For some
middle income countries in Latin America
such as Argentina, Brazil, Mexico and Uruguay,
the minimum wage was relatively
low in the 1990s and represented between
20 and 25 per cent of the average wage.
In these countries, almost all workers in
the formal economy receive wages higher
than the minimum wage, while many
workers in the informal economy were
receiving exactly the minimum wage and
many had their wages increased each time
the minimum wage was adjusted. That the
minimum wage could have an impact on
informal wages means that considerations
of what is a “fair wage” are not absent from
the determination of wages in the informal
economy: the determination of informal
wages goes beyond the traditional notions
of supply and demand. It also means that
increases in the minimum wage could have
a positive impact on the extent and the
level of poverty in the informal economy,
provided it remains at a fairly low level.