Impact of Minimum Wage on the Labour Market in Central America : Comparative Analysis of Costa Rica, El Salvador and Nicaragua

The countries of Central America exhibit a great deal of heterogeneity in their economies. Moreover, a period of intense economic reform during the 1990s followed by the resumption of economic growth has widened the gap between the wealthier countries (Costa Rica and Panama) and the poorer ones (Honduras and Nicaragua). This gap is also reflected in their labour market outcomes. This project will allow researchers to investigate how changes in labour legislation and minimum wage affect formal and informal labour markets, and household welfare in countries at three levels on the development scale: Costa Rica (high), El Salvador (middle) and Nicaragua (low). Researchers will construct panel data to follow individual workers over time, and make it available to other researchers. In order to contribute to the debate on changes to the minimum wage, the researchers will interact with stakeholders and policymakers in their respective countries. The project is expected to result in six country-specific and one comparative research paper addressing public policy questions related to the impact of minimum wage on worker welfare (wages, employment, unemployment, inequality, poverty) in Central America.

Project ID


Project status


Start Date

Tuesday, January 1, 2008

End Date

Thursday, July 1, 2010


24 months

IDRC Officer

Rodriguez, Mr. Edgard

Total funding

CA$ 276,200


North and Central America, South America, Costa Rica, El Salvador, Nicaragua


Employment and Growth

Project Leader

Alvaro Trigueros


Fundación Salvadoreña para el Desarrollo Económico y Social

Institution Country

El Salvador

Institution Website