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<?xpacket end="w"?><?xpacket end='r'?><Figure><ImageData src=""/></Figure><Figure ActualText="Increase in the minimum wage in 2024: its effects and conditions in the Mexican labor 
market
Luis Antonio Andrade Rosas
1
, Cesaire Chiatchoua
2
Recepc
tion
: 10/
11
/2023
Acepta
tion
: 
23
/
11
/
2023
Abstract
During the current administration, increases in the minimum wage have averaged 20%. On 
d
ecember 1, 2023, CONASAMI announced that the increase in the minimum wage will be 20% 
for 2024, the same as in 2023. Contrary to what COPARMEX estimated at 12% and with
in the 
limit that some analysts estimated between 15% and 20%. Based on estimates of labor supply 
and demand, this report presents the effects of this increase on the labor market. 
In particular, 
it is observed that the valuation of workers and subsidies b
y the government are key so that the 
20% increase in the minimum wage does not have a considerable impact on the imbalances in 
the labor market.
Key Words
salary increase, perception, labor market conditions, subsidies.
Clasificaci&#243;n JEL:
E24, J01, J
02, J41.
Introduction 
Wages are defined as &#8220;the remuneration that the employer must pay to the worker for his or her 
work&#8221; (Art
. 82)
. On the other hand, the minimum wage is conceived, by labor lay in Mexico, as 
the lowes
t amount that the worker should rec
eive in cash for services rendered in a working day
.
Moreover, it must be sufficient to meet the n
ormal needs of a head of household in the material, 
social and cultural order
;
as well as to provide compulsory education for children (Art. 90)&#8221; 
(Campos, 199
5; p.152)
.
In this way, the decision to move (increase or decrease) the amount of the minimum wage has 
a significant impact on the worker&#180;s life, on
the one hand, it increases their income and improves 
their working conditions; On the other hand, it has negative effects such as increased 
unemployment, given that the employer, not wanting to reduce his capital gain, decides to 
terminate his employment 
contract
.
Another element is the increase in the prices of products in 
the markets
.
F
inally, whether the minimum wage is raised can generate inequalities at the "><ImageData src=""/></Figure><P>1 Research professor at La Salle University, Mexico City landrade@lasalle.mx 2 Research professor of the postgraduate studies and research section, Higher School of Economics, IPN. cchiatchoua@ipn.mx </P><Figure ActualText="national level as well as the global level
,
as well as in the field of gender, as Torrens and G
oya 
(2019) point out.
Now, to justify such an increase in the minimum wage, it must be noted that inflation increases 
ev
ery year, regardless of size and country, so it is advisable that be a subsidy to counteract the 
imbalances in the population&#180;s budget
. 
In this sense, the current administration since its first 
year in office has maintained increases in minimum wage. Base on the reports of CONSAMI 
(2023), in 2019 it began to 
increase with 16.2%, the lowest was for 2021 of 14.99% considering 
the effects of 
the pandemic and for 2022 the increase has been the largest reaching 22%, finally, 
the increase for 2023 was 20%.
Experts point out the importance of wage increases, as it is reflected in the productivity of 
wor
kers and therefore in economic growth, togeth
er with the decrease in poverty and the 
increase in unemployment (ATCOM,2019).
However, it is worth asking whether the working 
conditions are in place, on the part of companies and the government, to pay for such an 
increase. 
That&#8217;s is, if it could result 
in a downsizing
, if such an increas
e causes inflation and thus 
have a vicious circle and finally, in case the government subsidizes, if the authority will no neglect 
other public services or economic support to sustain such an increase.
On the other hand,
any worker would want a wage increase; But the question is: is it enough to 
ensu
re the reach of commodities? 
Or as discussed Endenred (2022), that, while such an in
crease 
cannot secure basic commodities for an average family, getting the increase from the
workers is 
perceived in a considerable way.
Based on the above, this article shows the repercussions in terms of unemployment that a 
percentage increase in wages coul
d cause by 2024. 
The analysis is based on a database to 
estimate the labor demand and 
supply of Mexic
an workers in 2022
. A key part of the analysis is 
worker&#180;s per
ceptions and potential government subsidies, which are considered to avoid drastic 
declines in employment.
The work is presented in 5 sections, in addition to the introduction, th
e first section shows the 
rev
iew of the literature corresponding to the topic
. Then, the methodology on the labor market 
and the effects that the
market has due to these increases are presented. 
The third section is the 
analysis and results. 
A brief compar
ison of the results with the re
levant literature is presented 
in the fourth section. Finally, the conclusions, recommendations and limitations of the analysis 
are shown.
Literature
There is a complexity of the policy on the management of the minimum wage, 
which has aroused 
the interest of international researc
h. 
The effects of the minimum wage are different, both on 
the workers who receive it and, on the industries, where these workers belong. In this sense, "><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure ActualText="Hern&#225;ndez, Vald&#233;s and Gonz&#225;lez (2018) comment tha
t increases in the minimum wage are 
associated with increases in employment in the construction, transportation and wholesale 
trade industries; On the other hand, increases in the minimum wage are associated with 
reductions in employment, in industries suc
h as manufacturing, services and public 
administration; especially in the population of workers under 25 years of age.
Although there is a need for wage increases, as argued by Torrens y Real (2019), who point out 
the great inequality of minimum wages at the 
global
and country level, as well as gender wage 
ine
qualities, with the minimum wage being recognized as vital 
for the satisfaction of the worker 
and his or her family
.
Despite this, there are workers who are dissatisfied with the salary 
increase, since it has been observed that some 
workers do not 
receive
this increase in an 
equitable or proportional way
.
Accordin
g to Lopresti 
and
Mumford (2016), workers would be 
unhappy with the increase in minimum wage, when such an increase does not correspond to th
e 
wage increase that the company would give them
. 
In relation to the above, 
B
&#225;r&#225;ny (2016) 
comments that adjusting w
age or possible increases base in minimum wages not only train and 
achieve better wages. 
Although the salary increase has a 
general purpose like reduce poverty, some authors say that 
its effect is very insignificant, however, Romich and Hill (2018) sugges
t that, to avoid an 
insignificant effect, the authorities should focus on who dictates the increases, also, a fiscal 
policy of support to employees to accomplish that proposal of salary increase. 
The objective of our essay
, is to analyze the effect of the
salary increase of 20% for 2024 on the 
level of employment, trying to condition that the minimum salary increase does not have an 
impact on the employment. Despite some authors, consider that the effects of the minimum 
salary aren&#8217;t always positive. For e
xample, Bazan et. Al. (2022) justify with evidence, the little 
negative effects on the statistics significative on the minimum wage increase (specifically on 
teenagers). A similar result has 
been
pointed by Cebrian 
et al. (
2010), pointing out the existence
of a little negative effect Kaitz index on the level of 
employment of
the companies and a null 
effect on the employment rate, even with the teenagers 
In the case of M
exico, figure 1 shows a growing tendency along of the almost 23 years, although 
insuffic
ient according to Martinez (2018). 
This has allowed a better distribution of income as 
Campos 
and Rodas (2020, P,51) point out, &#8220;the minimum wage increase 
is
reflected practically 
one by one in the first five quantiles on the distribution. 
Then, the minimu
m wage has an effect
on the salary structure, on average, up to the 10
th
quantile of the distribution&#8221;. 
In the same line of measuring the effectiveness of increases in the minimum wage in the 
distribution of income, Medina (2018), through the analysis of the behavior of salaries during 
the period 2007
-
2017 to known if its performance has been reflected posit
ively in the salaries 
of workers in said sector; Their results show that there is a positive and significant relationship "><ImageData src=""/></Figure><Figure ActualText="between labor productivity and wages. 
However,
although in the same way to productivity levels, 
these 
increases are insufficient."><ImageData src=""/></Figure><Figure><ImageData src=""/>0 50 100 150 200 250 </Figure><P>200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023 </P><Figure ActualText="Fi
gure 1. Evolution of the minimum salary in Mexico.
Source: National minimum wage comission, 2023."><ImageData src=""/></Figure><Figure ActualText="Although
our objective is to
condition the increase in the minimum wage on maintaining or 
increasing the level of employment, its effects on employment could
be negative. For Jimenez 
(2022), the impact of the increases in the minimum wage that have been granted since 2019 on 
the level of employment is discussed, since these have been well above inflation, 
which
resulted 
in bad news. 
For job creation, especiall
y in a scenario of relatively lo
w economic growth."><ImageData src=""/></Figure><P>Methodology </P><Figure ActualText="We show concepts of labor supply and demand, to anal
yze the effect of the minimum wage. In 
this way be:"><ImageData src=""/></Figure><P>&#119897;&#119889;=&#119886;+&#119887;&#119908; <Figure><ImageData src=""/>, con </Figure>&lt;0 </P><Figure ActualText=",  (1)"><ImageData src=""/></Figure><P>&#119897;&#119889; </P><P>&#119897;&#119904; </P><P>&#119897;&#119904;=&#119888;+&#119889;&#119908; &#119889;&gt;0 </P><Figure><ImageData src=""/>&#119908;</Figure><Figure ActualText="The labor demand equation, where"><ImageData src=""/></Figure><Figure ActualText="is the quantity of workers demanded by companies and "><ImageData src=""/></Figure><Figure ActualText="W is the salary they are willing to pay for the work demanded. While, the work 
workers who aspire to a salary 
is, 
, con 
,  (2)"><ImageData src=""/></Figure><Figure ActualText="offered by "><ImageData src=""/></Figure><Figure ActualText=", that observes on figure 1 and 2. 
From the above and based on Snyder and Nicholson (2008), suppose that the government 
orders all companies to provide a particular or additional benefit to their workers, where this 
benefit costs t per hired worker. With this arrangement, labor cost increas
and thus 
the labor demand equation is,"><ImageData src=""/>The equilibrium wage in the labor market is, &#119890;&#119902;=&#119886;&#8722;&#119888;&#119887;+&#119889;e to +&#119905;</Figure><P>&#119897;&#119889;=&#119886;&#8722;&#119887;(&#119908;+&#119905;) <Figure ActualText=",  "><ImageData src=""/></Figure>&#119887;&gt;0 </P><Figure ActualText=",  (3)"><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>&#119908;+&#119896;</Figure><P>&#119897;&#119904;=&#119888;+&#119889;(&#119908;+&#119896;) <Figure><ImageData src=""/></Figure>&#119889;&gt;0 </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><P>&#119886;&#8722;&#119888; &#119887;&#119905;+&#119889;&#119896; &#119887;&#119905;+&#119889;&#119896; </P><P>=&#8722; =&#8722;</P><P>&#119908;&#119890;&#119902;&#119873; &#119908;&#119890;&#119902; </P><P>&#119887;+&#119889; &#119887;+&#119889; &#119887;+&#119889; </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><P>&#119886;&#8722;&#119888; &#119887;&#119905; &#119887; </P><P>=&#8722;= &#119905; </P><P>&#119908;&#119890;&#119902;&#119873; &#119908;&#119890;&#119902;&#8722; </P><P>&#119887;+&#119889; &#119887;+&#119889; &#119887;+&#119889; </P><Figure><ImageData src=""/>&#119887;&#119887;+&#119889;&#119887;&#119887;+&#119889;&#119905;</Figure><Figure><ImageData src=""/>&#119896;=&#119905;</Figure><P>&#119889; </P><P>&#119908;&#119890;&#119902;&#119873;=&#119908;&#119890;&#119902;&#8722;&#119905;(1+ )</P><P>&#119887;+&#119889; </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>&#119905;</Figure><P>Figure 2. Valuation by workers, equal to the tax charged to the company (left) and greater than the tax charged to companies (right). Source: self made. </P><Figure><ImageData src=""/>&#119896;&gt;&#119905;</Figure><P>Analysis and resulted </P><Figure><ImageData src=""/>&#119897;&#119899;&#119897;&#119900;=6.013+0.542&#119897;&#119899;&#119908;&#119875;&#119907;&#119886;&#119897;&#119900;&#119903;&#119897;&#119899;&#119871;&#119889;=18.754&#8722;0.926&#119897;&#119899;&#119908;&#119875;&#119907;&#119886;&#119897;&#119900;&#119903;</Figure><P>18.754&#8722;6.013 </P><P><Figure><ImageData src=""/></Figure>&#119908;&#119890;&#119902; </P><P><Figure><ImageData src=""/></Figure>&#119897;&#119899;&#119908;= =8.67 =&#119890;8.67=5879 </P><P>0.542+0.926 </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><P>&#119897;&#119899;&#119871;&#119889;=18.754&#8722;0.926ln(&#119908;(1+&#119905;)) &#119897;&#119899;&#119897;&#119900;=6.013+0.542ln(&#119908;(1+&#119896;)) </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><P>&#119897;&#119899;&#119871;&#119889;=18.754&#8722;0.926ln(1+&#119905;)&#8722;0.926&#119897;&#119899;&#119908; </P><Figure><ImageData src=""/></Figure><P>&#119897;&#119899;&#119897;&#119900;=6.013+0.54ln(1+&#119896;)+0.542&#119897;&#119899;&#119908; </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>&#119896;</Figure><P>=&#119905;=0.2 </P><Figure><ImageData src=""/></Figure><P>&#119897;&#119899;&#119871;&#119889;=18.585&#8722;0.926&#119897;&#119899;&#119908; </P><Figure><ImageData src=""/></Figure><P>&#119897;&#119899;&#119897;&#119900;=6.195+0.542&#119897;&#119899;&#119908; </P><Figure><ImageData src=""/>&#119882;&#119890;&#119902;</Figure><P>=165.29 </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>&#119871;</Figure><P>=46750 </P><Figure><ImageData src=""/></Figure><P>46750&#8722;45120 </P><P>&#119863;&#119890;&#119904;&#119890;&#119898;&#119901;&#119897;&#119900;&#119910;&#119890;&#119898;&#119890;&#119899;&#119905;&#119903;&#119886;&#119905;&#119890;= =0.03 </P><P>45120 </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>&#119905;=0.2&#119896;=0.283&#119882;&#119890;&#119902;=160.48&#119871;=46091&#119905;=0.1&#119896;=0.1&#119882;&#119890;&#119902;=217</Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><P>Literatura </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/>Percepci y valoraci del aumento del salario m&#237;nimo en M&#233;xico y su </Figure><P>efecto en el mercado laboral. En Gez-&#193;lvarez, D. y Gez, R. (2023): &#161;Sanle! Salario Digno: Propuestas para la prosperidad equitativa en M&#233;xico, Debate: Penguin Random House, Grupo editorial. Primera edici. </P><Link><Figure><ImageData src=""/>: <Link>10.20430/ete.v87i345.859 </Link></Figure></Link><Figure><ImageData src=""/></Figure><Link><Figure><ImageData src=""/><Caption><P>Jim&#233;nez, A. (2022). Estimaci de la demanda de trabajadores asalariados en M&#233;xico. An&#225;lisis econico, 37(94), 105-123. DOI: <Link>https://doi.org/10.7440/res64.2018.03 </Link></P></Caption></Figure></Link><Figure><ImageData src=""/></Figure><P>Mart&#237;nez, J. G. (2018). La historia sin fin: el debate por el salario m&#237;nimo. An&#225;lisis Econico, 33(83), 5-28. </P><Figure><ImageData src=""/></Figure><Figure><ImageData src=""/><Caption><P>Medina, R. (2018). Din&#225;mica salarial de la industria automotriz en M&#233;xico: un an&#225;lisis de datos de panel para el 2007-2017. Tesis, El Colegio de la Frontera Norte. </P></Caption></Figure><Link><Figure><ImageData src=""/></Figure></Link></TaggedPDF-doc>