Minimum wage and inequality

Most Panamanians want to increase their financial, social and emotional well-being, But lately, Panama offers few opportunities for improvement, so corruption is more attractive. For example, if a public official earns 500 dollars, and to be able to buy a basic basket he needs 700 dollars, he will be prone to corruption, regardless of what is written in the law.

Public officials might be expected to seek bribes, especially in a society where law enforcement and the prosecution of corruption offenses are not prevalent. It’s not that the inspector is a bad person by nature, but circumstances of “stagflation” They make him make tough decisions in order to survive.

Corruption in Panama iis a question of survival and of the country that failed to improve the 36th annual corruption perception index international transparency, sending a discouraging message to investors. The average score in the world is 43, and Panama has not managed to rise above 36 in the last five years.

However, orthodox economics has always rejected the convenience of increasing minimum wages because it increases the cost of labor and inexorably leads to a decrease in the demand for that factor; research Card and Krueger 1994 contributed resolutely generalize the new way of thinking and put the market hypothesis and the possibility of speaking about the “law of demand” on the ropes.

1994 David Card and Alan Krueger published in the American Economic Review, that the facts were very different from what was predicted in theory, since – using real data – they were able to confirm that the increase in the minimum wage in New Jersey did not cause the job losses that were supposedly associated with the increase in the price of the labor factor. The most significant turning point in the article was the invitation the credibility revolutionwhich allowed economists to address causal problems.

The conclusions of the 2021 Nobel Prize were that moderate increases in the minimum wage have no or very little effect on employment, and in 2012 Dickens, Manning and Butcher They stated that raising the minimum wage changes the general equilibrium the distribution of wages and, therefore, all wages rise. Others speak of a “measure” of perceived fairness.

Stiglitz confirms that markets have a role shaped by politics in developing countries as well, with their quasi-corrupt system of political campaign financing and their revolving door system between government and businessmen campaign donors, politics “She is shaped by money.” Inequality is not a natural disaster, but the result of a deliberate policy.

The study they conducted jointlyOECD, ILO and World Bank concludes that productivity increased by more than 15% between 1999 and 2013, while labor’s share of produced wealth declined in all advanced economies between 1970 and 2013.

Wage cuts usually do not happen directly, but through a pathway job change expensive for cheaper. A few years ago, a study of employment in the United States showed that wage cuts in large companies were usually compensated by hiring new staff in lower categories.

One of the root causes growing inequality was a failure experienced by that majority part society that are workersboth in terms of the conditions under which they perform their activity, as well as in terms of compensation.

I hope there will be a moderate increase in the minimum wage reduce corruption and reduce marked inequality Panama that brings people hunger and poverty.