| Norma Yadira Memije Alarcón Perla Elizabeth Ventura Ramos Jesús Zaragoza Martínez
Differences in impact of the minimum wage on reducing multidimensional poverty in Chilpancingo,
Guerrero, Mexico
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Vol. 7 No. 2, 2025, jul- dic, pp. 14-24 Revista Internacional de Salarios Dignos |
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| Differences in impact of the minimum wage on reducing multidimensional poverty in Chilpancingo, Guerrero, Mexico
Norma Yadira Memije Alarcón1, Perla Elizabeth Ventura Ramos2, Jesús Zaragoza Martínez3
Received: 13/06/2025 Accepted: 22/09/2025
Abstract
In Chilpancingo de los Bravo, the high leve! of labor informality is notable, limiting the benefits of the minimum wage, as many workers continue to lack access to social security or job security. This study aims to evaluate the impact of the minimum wage on reducing multidimensional poverty among two groups of workers: formal and informal workers in this locality, between 2018 and 2023. Using a quantitative approach with a non-experimental design, secondary data obtained from official sources were analyzed to establish the relationship between the increase in the minimum wage and changes in poverty indicators in the region. The results show that structural factors persist that limit significant poverty reduction: high labor informality and the lack of effective complementary policies. The study concludes that the minimum wage is not sufficient to transform the living conditions of the most vulnerable sectors. A comprehensive strategy is required that articulates wage increases with public policies aimed at labor inclusion, strengthening the social protection system, and equitable access to opportunities.
Key Words
13 - Well-being and Poverty, E26 - Informal Economy, )3 - Wages, )68 - Public Policy
lntroduction
Poverty is and has been for a long time, a central tapie in the analysis of countries' social situation, their development, and life of their people. Multiple efforts are being made for measuring the phenomenon in a quantitative manner, as for identifying the processes associated in arder to incise in the public policies that are responsible for improving people's the quality of life. Without question the minimum wage has been one of the fundamental factors that has affected the workers.
In Mexico, the measurement of multidimensional poverty has been developed by C0NEVAL, based on an analytical framework that considers the lack of social rights as a key factor to determine poverty (C0NEVAL, 2023). Through this approach, persistent inequalities have been identified in states with high levels of poverty, such as Guerrero, which makes it more relevant to
study the impact of the minimum wage on the region. |
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| 1 Profesora investigadora, Universidad Autónoma del Estado de Guerrero, México. Chilpancingo de los Bravo, Guerrero, México. +52 747 471 9310. niviasenen@gmail.com |
| 2 Profesora investigadora, Universidad Autónoma del Estado de Guerrero, México. Chilpancingo de los Bravo, Guerrero, México. +52 747 471 9310.
3 Profesor investigador, Universidad Autónoma del Estado de Guerrero, México. Chilpancingo de los Bravo, Guerrero,
México. +52 747 471 9310.
Vol. 7, No. 2, ISSN. En trámite, pp:14-24 |
| In fact, income is an important component for measuring poverty; however, an increase in the minimum wage it's not the only factor that can help mitigate poverty. The other associated components are also relevant, as considered by various authors and institutions as essential aspects in the measurement of poverty.
State of Guerrero and particularly Chílpancingo presents high poverty and inequality indexes, which makes ita relevant scenario to analyze the impact of the minimum wage. The relation between the labor market and poverty has been widely studied, highlighting that informal employment remains a limiting factor for the positive impact of wage increases. (Reyes et al., 2021).
The inequality access to formal jobs prevents the benefits from increasing the minimum wage to be equitably distributed between the working population. (C0NEVAL, 2023)
Authors like Moreno et al. (2024) assure that in Mexico the minimum wage has become a fundamental instrument of social policies of the current administration. Their annual increase, over the inflation, has played a key role to reduce the presence of poverty. So far in the current administration, marked by the pandemic, the absence of countercyclical fiscal policies anda weak increase in the activity, the minimum wage has been the key to eradicate poverty.
This investigation pretends to correlate multidimensional poverty with the minimum wage in both group of workers.
The discussion of minimum wage is not justan economic debate, but also a topic of social justice. In Chílpancingo, where more than the 60% of the population live in multidimensional poverty (INEGI, 2023), the minimum wage can play a key role in upgrading the quality of life. Nevertheless, the impact depends on factors such as the labor market, inflation, and productivity.
Particularly in Guerrero, according to data from C0NEVAL (2023), minimum wage increase has had positive effects in the reduction in labor poverty, but the impact has been less than the multidimensional poverty. According to the study made by Carmona et al. (2023) in the Universidad Autónoma de Guerrero, the high leve! of informality in the region limits the benefits of the minimum wage because many workers continue without access to social security nor employment stability.
Chílpancingo de los Bravo is the capital of the state of Guerrero, located in a mountainous region in the southeast of Mexico. The geographical location influences the availability of resources and the access to basic services such as education and health. The tourism also plays and important role in the local economy but faces challenges due to security concerns and infrastructural development.
The principal social deficiencies of Chílpancingo in 2020 were privations to access to social security, basic living services and health services.
The incidence of moderate and extreme poverty, as well as the population vulnerable due to social deprivations and incomes, highlights the necessity of policies and programs that can address these issues in an integral way.
The current study examines the relation between the minimum wage and the multidimensional poverty in Chílpancingo, considering the economic literature as empirical evidence. The investigation is centered in answering the following question: How the mínimum wage ímpacts in the reductíon of the multídímensíonal poverty in Chílpancingo, Guerrero?
General 0bjective: Evaluate the impact of the minimum wage in the reduction of the multidimensional poverty in two groups of workers: formal and informal in Chílpancingo, Guerrero,
between the years 2018 and 2023. |
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| Specific 0bjectives:
Analyze the relation between the indicators of multidimensional poverty and minimum wage on formal and informal workers.
Compare the indicators of multidimensional poverty befare and after the increments of minimum wage in the period 2018 - 2023.
Collect and analyze the perceptions of the workers about the impact of the minimum wage in their quality of life.
Relevance of the manuscript:
The reduction of the poverty is one of the main objectives that have the States, Governments, private firms, and international organisms. In the case of Mexico, it has been proven different strategies to reduce it in time. They have tried focalized social programs, conditioned cash transfers, among others.
In the last ten years, the Mexican government had shifted on their social and labor policies. The social one has become universal, and the amount wired has increased considerably. In contrast, the labor policies has been transformed by significative changes such asan increase of almost the double of the previous minimum wage in real terms, the ban on outsourcing, the democratization of trade unions, and other labor reforms
The tapie that is discussed permanently is the academical environment and in spaces of public policies is about the mechanisms to promotean upgrade in the increases of the workers, particularly that social class where those at the lower end of the wage seale are located, assuring a fairer distribution in the wages, lowering the increasing inequality in the income of the population.
In fact, is well known that the medium wage of the countries doesn't explain the behavior of the distribution of wages between the different group of salaried workers, exists sufficient empirical evidence that shows that in the las few years the inequality wage has increased in most countries in the World.
Certain level of inequality in the wage salary could be the result by the profile of the worker (such as level of instruction, age, tenure in a position), being then the profile by itself the variable that could cause incidence in the variation of the income across all deciles. Nevertheless, other series of factors considered could cause a difference in the variation in the level of income, between others like gender, firm size, and labor market structure (formal and informal).
However, exists the academic discussion and policies over the value of the real salary and the work demand. The increasing number of minimum wages lowers the opportunities of employment to the workers of lower incomes and promotes the informal work.
This investigation pretends to analyze the relation between the multidimensional poverty indicator and the minimum wage on formal and informal workers.
Literature Review/Theoretical Framework
From a historical perspective, the origins of the minimum wage are since 1896, when it was recognized that the wages received by workers in New Zeland and Australia, particularly women and young people, resulted insufficient for them and their families, which took the authorities of those countries to stablish a minimum wage. (Bernabéu, 2019).
In the case of Mexico, the minimum wage that was received by peasants and workers wasn't fairer, because a lot of people would receive a miserable wage that make visible the level of exploitation that was under the working class of the time. Additionally, to this terrible situation,
they had activities that would put on risk the liberty of the workers, as it was the case of las |
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| changed, holding up around a 7% of the total population. This phenomenon reflects inequality in the distribution of the income and the access to basic services, that continue to affect the most vulnerable sector of the population.
The inflation in the las years has been a critica! factor, reaching a peak of 8.7% in 2022. This has reduced the purchase power of the salaries, which affects directly to the low-income households. This situation has generated a great discussion on the capacity of the minimum wage to cover the basic needs of the population and its effectiveness as a tool to reduce poverty.
In 2023, the minimum wage in Mexico is still below the threshold of poverty by incomes established by CONEVAL. Meanwhile a family of four members needs monthly $11,290.80 (Mexican pesos) to not be in poverty by income, while the minimum wage only covers monthly
$2,401.20, representing only the 21% of the necessary quantity. lt's estimated that to accomplish the decent living standard stipulated by the Mexican Constitution, the minimum salary should be multiplied 4.7 times its current value (CONVEAL, 2023).
In this context, the rising incomes in the minimum wage had generated debates over its effects in the reduction of poverty. Although they have improved the incomes of the formal workers, their impact in the multidimensional poverty has been moderated dueto the persistence of the labor informality.
The relationship between the minimum wage and the reduction of the poverty is not direct. Although an increase in the wage helps to improve the incomes, the persistence of an informal job and the lack of access to basic services blocks the uniform positive effects in ali the population (CNSM, 2025). Experts suggest that the upgrade of the minimum salary should be accompanied by measures such as incentives to the labor formalization and subsidies to the access housing, education, and health.
Currently, in Mexico the official measurement of the poverty does not depend on just overcome a line of minimum income, but rather it is recognized as a multidimensional phenomenon that vulnerates the rights and people's freedoms.
Reyes et al. (2024) assure that this measurement combines two large spaces of the leve! of life: the economic well-being and the social rights. Additionally, they considered that his two spaces are spheres of the quality of life that can't be add up to one sole measurement of the well-being, therefore, establishes differentiated forms of conceiving the deprivation in each one: in the case of economic well-being, uses the current per capita household income asan indicator leve! of live in the households and stablished two minimum thresholds that can represent the minimum wage of a household has to have in order to satisfy their necessities: the line of minimum well-being (LBM) or the extreme poverty by incomes (associated by a basic food basket), and the line of well-being (LB) or the poverty by incomes (associated with both the food and non-food basic baskets)
Gómez and Munguía (2023) assure that Mexico was the first country in having this multidimensional measure of poverty, that, besides the thresholds of income, considers other factors that blind the people against poverty.
According to Villalobos (2023) poverty in Mexico is characterized by its multidimensional nature, where structural factors such as education, housing, health, and work play a crucial role in its dynamic. The relation between the minimum wage and poverty has been taken over numerous studies that search to identify in which measure the increases in salaries could mitigate the extreme poverty and upgrade the quality of life of the population. (CONEVAL, 2023).
The studies of the minimum wage have generated severa! theories, finding:
The Theory of the competitive market, which offers that increases in the minimum wage could generate unemployment if the companies reduce the hiring due to the increasing labor costs. (Stiglitz, 2022). |
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| The theory of monopsony suggests that in markets where a few firms domínate the employment, the mínimum wage could increase employment and the incomes without generating adverse effects. (Card & Krueger, 1994).
The induced productivity theory, explains that a higher mínimum wage could incentive the workers to increase their productivity, which benefits the employees and the employers (Neumark & Wascher, 2008).
In Brazil, Lemos (2009) demonstrated that increases in salaries upgraded the well-being of the workers without generating significant losses of employment.
In another geography, Mexico, Campos et al. (2017) they found that the upgrades in mínimum wage have reduced the informal labor and has improved the incomes of the workers, even if their impact in poverty has still been moderated.
Used Methodology
The design was non-experimental, cross-sectional, and correlational. lntegrated in two methodology phases:
Quantitative phase: analysis of the multidimensional poverty indicators (income, health, education, social security, and others) coming from C0NEVAL, INEGI, and EN0E.
Qualitative phase: semi-structured interviews to workers in the formal and informal sectors to catch perceptions over the changes in their quality of life.
For the sample it has been considered micro-data from the EN0E for the period 2014-2023. The EN0E is the consolidation and merge of the Encuesta Nacional de Empleo Urbano (ENEU) and the Encuesta Nacional de Empleo (ENE) that for more than 20 years have given information of the population occupied and non-occupied economicaly.
lt has been taken into account the quantity that wasn't excessive of people with the objective of not bias the obtained results, considering that this is the number varíes constantly by the movement of the workers from an area to another.
Criteria of inclusion People over 18 years.
Residents of Chílpancingo, Guerrero, during the period 2018-2023.
Workers that have received an income equivalent or like the mínimum wage in sorne moment of that period.
For the formal group: registe red employees on the IMSS, ISSSTE or that counts with a formal contract.
For the informal group: workers without a contract, social security, or work by its own. Exclusion criteria
People that do not live in a habitual way in Chílpancingo.
Workers which income surpasses three times the mínimum wage. Public servants or people with senior management positions.
Distribution of participants lnterviewed a total of 42 people:
22 workers in the formal sector, distributed in the next categories: Commerce: 10
Prívate health services: 6
Public administration: 6 |
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| 20 workers in the informal sector:
Street vending: 8
Personal care services (hairdressing industry, cleaning): 5 Construction work, among other trades: 7
The selection was intentional and by convenience, seeking representativeness of the labor activities predominant in the region.
Techniques and instruments of recollection of data:
Quantitative: data bases from C0NVEVAL (multidimensional indicators of poverty) INEGI (2020 Census and EN0E), and Banco de México (2022) (information about inflation and salaries)
Qualitative: semi-structured interviews applied in person or by phone, recorded and transcript. lt was designed a guide with open questions oriented to explore:
Changes in the available income.
Access to basic services and social security.
Perception of the mínimum wage as a tool to upgrade the well-being.
The qualitative information was categorized and analyzed by thematic codification, allowing triangulation with the static data.
Procedures followed
1.Documental review of the mínimum wage in Mexico and its impact in the multidimensional poverty.
2. Application of the interviews to the selected workers.
3. Comparative analysis of indicators of multidimensional poverty in the workers befare and after the increments in the mínimum wage.
4. Triangulation of the findings with secondary references and economic theory. Results and discussion
The findings show that the increase in the mínimum wage has increased the incomes of formal workers and has reduced partially the multidimensional poverty in Chílpancingo. However, la the informal labor keeps being a significant obstacle. In the informal sector, the increasing salaries doesn't have the same impact, which generates a breach in the benefits of the salary politics.
The evaluated indicators of poverty include:
• lnsufficient per capita income
• Lack of access to social security
• No access to health and education
In the formal sector, the workers experienced upgrades in their incomes and access to social benefits, nevertheless, in the informal sector, the increases in the mínimum wage didn't impact significantly in an upgrade in their life conditions.
Perceptions of the workers:
• "The increase in the mínimum wage helped to upgrade my incomes, but the prices also went up." (Formal worker)
• "In my informal job, the mínimum salary didn't impactas much, 1 keep earning the same." (Informal worker)
• "The increase in the mínimum wage allowed me to have better access to health services." (Formal worker)
• "Even though my salary went up, the cost of transportation and alimentation increased too." (Informal worker)
• "Now I can earn a lot more for emergencies, but it's still insufficient for improving my
quality of life." (Formal worker) |
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| • "The increase in my salary didn't significate a change in my job, because I still depend on the demand of the day." (Informal worker)
• "My children now can continue with their education without a lot of economic difficulties." (Formal worker)
• "In the informal sector, not always is respected the minimum wage, therefore, 1 didn't see any real difference." (Informal worker)
Next, its presented comparative data over the evolution of the indicators of multidimensional poverty in formal and informal workers befare and after the increases in the
minimum salary. |
| Table 1
Comparison of lndicators of Multidimensional Poverty
Formal Formal
lndicator Workers Workers | Informal Informal
Workers Workers |
| (2018) (2023) (2018) (2023) |
| lnsufficient per capita income Lack of access to social security
No access to | | | | | | | |
| 0.450000 | 0.300000 | 0.600000 | 0.550000 | |
| 0.100000 | 0.050000 | 0.900000 | 0.880000 | |
| | | | | | |
| health and 25% 15% 70% 65% |
| education |
| In the table is observed that the multidimensional poverty indicators that manifest in this study behaves as the following: |
| lnsufficient per capita income: |
| In 2018, the 45% of the formal workers presented insufficient incomes, while in 2023 this
number was reduced to a 30%.
In the informal sector the reduction was less, passing form the 60% in 2018 to a 55% in 2023, which indicates that the increase of minimum salary had a more favorable impact in the formal sector.
The qualitative perception of the interviewed in the case of the formal workers we find that "The increase in the mínimum wage helped to upgrade my incomes, but the prices a/so went up''. In contrast, the informal workers refer: "In my informal job, the mínimum salary didn't impactas much''.
According to C0NEVAL (2023), the minimum wage still covers only the 21% of the necessary income for not to be in poverty by in come, which aligns with the results of the study respect to the insufficiency of the income as a structural phenomenon.
The increase in the minimum wage has improved formal incomes, but inflations and
informality limit the real effect over the total percapita income, especially in the informal sector. |
| Lack of access to social security: |
| In 2018, only the 10% of the formal workers lack social security, reducing 5% in 2023.
In exchange, in the informal sector, most of the workers (90%) were still without access to social security in 2018 and in 2023 was only reduced to 88%. This demonstrates that the minimum wage had lower incidence in upgrade this aspect in the informal sector. |
| From the qualitative aspect, there can be found opinions of the participant which express, "Now I can earn a lot more far emergencies" (formal); "In the informal sector, not always is respected the mínimum wage, therefore, I didn't see any real difference." (informal).
In this sense Carmona et al. (2023) and Reyes et al. (2021) confirmed that the access of the social security is highly correlated with the formal work. The informality is a structural obstacle for the employees to access to these rights.
Even though the minimum wage went up, the social security cover-up it's still inequal. The increase has effect where there's no institutional framework (formal sector), but it's almost
irrelevant for whom they are out of the labor legal framework. |
| | No access to health and education: |
| In the formal sector, the lack to health services went form 25% in 2018 to 15% in 2023, showing a significative upgrade.
Nevertheless, in the informal sector, the reduction was minimum of 70% in 2018 to 65% in 2023, which indicates that the informal workers still face difficulties to access to health services.
Formal workers expose that "The increase in the mínimum wage allowed me to have better access to health services''. Workers in the informal sector reference: "We still depend on the demand ofthe day''.
According to CONEVAL (2022) and Gómez and Munguía (2023) the lack of access to health is one of the critica! dimensions of the multidimensional poverty, specially between informal workers.
The next graph shows and helps as a conclusion of the findings presented before |
| Graph 1 | Evolution of multidimensionalpoverty reduction |
| | | 90 Formal 2018
■Formal 2023
70
■ 1nformal 2018
1nformal 2023 |
| The results show that even the minimum wage could impact indirectly in the access of health through formalization of affiliation, in the practice just the formal workers really benefit. The change is marginal in the informal workers.
In general sense, it's exposed that the informal workers do not perceive a real upgrade, meanwhile the formals do, although limited by the increase of prices.
The focus of "Economy of two sectors" (Gómez y Munguía, 2023) helps explain this
inequality. Referring that the benefits of the minimum wage are limited to the formal sector. |
| Conclusions
The increase in the minimum wage has demonstrated to have a significant positive impact in the reduction of the multidimensional poverty in the formal sector of the economy. This in crease has allowed a lot of formal workers improve their quality of life and access to resources that were previously limited. However, this favorable effect has been limited in the informal sector, where the lack of regulation and labor protection difficult that the salary increments be traduced as substantial upgrades in the conditions of life of the workers.
Is important to highlight that the upgrade of indicators of poverty observed in the view of the formal sector is measured by the access of social security and the adequate labor benefits. These factors are essentials dueto its guaranty of a protection network that allows the workers face majar economic and social adversities. In contrast, the informal sector lacks these guarantees, which perpetuates a cycle of vulnerability and exclusion.
However, structural barriers are still persistent in the informal sector because they hinder that the increments in the wages ereate a real impact in the quality of life of their workers. These barriers include the lack of access to basic services, the labor instability, and the absence of fundamental labor rights. Without an adequate intervention, is less probable that the efforts to upgrade the minimum salary can effectively reduce the poverty in this sector.
Finally, is suggested the urgent implementation of politics of fiscal incentives for those firms that decide to formalize their workers. This measure not just contributes to upgrade the labor conditions, but also would foment a fairer and more equal environment. Is crucial to develop programs of capacitation oriented to upgrade the employability of the informal workers, offering them the necessary too Is to access to better labor opportunities and exit the cycle of poverty.
lt is suggested for future investigations about the tapie to work on the labor costs and its relation in inflationary spirals, the possibility to raise the salary without generating stress on the prices, and to study the inflation in a perspective of distributive conflict including the business adjustments through greater prices and benefits considering the formal and informal sectors of work.
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