Raising the minimum wage in developing countries could
increase or decrease poverty, depending on labor market
characteristics. Minimum wages target formal sector
workers—a minority in most developing countries—many
of whom do not live in poor households. Whether raising
minimum wages reduces poverty depends not only on
whether formal sector workers lose jobs as a result,
but also on whether low-wage workers live in poor
households, how widely minimum wages are enforced,
how minimum wages affect informal workers, and
whether social safety nets are in place.