Whether minimum wages are more likely to affect household heads or secondary
family workers is particularly important. For example, in Honduras, where multiple
minimum wages mean that one worker in the household could face a higher minimum
wage than another, higher minimum wages only reduce household poverty if the
minimum wage affects the household head [10].
Results from studies in Brazil, Colombia, and Nicaragua suggest that if a higher
minimum wage increases the wages of household heads without leading to large
employment losses, poverty will fall (this will happen even if secondary workers lose
work). On the other hand, if minimum wages have a significant negative employment
effect on household heads, then higher minimum wages will have, at their best, only
modest impacts on poverty (this will happen even if there are positive employment
effects on secondary family workers).
In Colombia, higher minimum wages had a significant negative effect on the
employment and hours worked of household heads, but not on the employment and
hours worked of secondary workers [6]. In Brazil, higher minimum wages also reduced
the employment of household heads and increased labor force participation slightly
for other household members [9]. As noted, higher minimum wages in Colombia and
Brazil had a modest impact on poverty and no impact on the incomes of the poorest
households.
But in Nicaragua the reverse holds: household heads were less likely than other
members to lose their jobs because of higher minimum wages [4]. Moreover, household
heads who lost their jobs because of higher minimum wages were more likely to
find work in the public sector or as self-employed workers, while other household
members who lost their jobs were more likely to leave the labor force. As a result,
higher minimum wages caused a statistically significant and substantial reduction in
poverty in Nicaragua.