Peter Gregory

Document Type

Working Paper

Publication Date



Along with a proliferation of independent countries in the. Third World since World War II has come a proliferation of minimum wage regimes. Following the example of the industrialized countries and the Encouragement of the International Labour Organization, the less developed countries have created machinery for defining and administering legal minima. The justifications offered for such intervention in the wage determination process are the familiar ones advanced in the more developed countries. In the presence of great poverty, minimum wages are proposed as an ameliorative measure which can protect wage earners from the depressive influences of competitive or, even worse, monopsonistic labor market forces on wage levels. Implicit is a belief that the labor market cannot be relied upon to yield secularly increasing wage levels either because of the existence of perfectly elastic labor supply schedules or of unspecified "market imperfections" . 2 That a shift in demand could maximize another professed goal, that of employment, in the presence of an elastic supply and wage stability seems to be overlooked. Therefore, aggressively administered minimum wages have been advocated as a means for raising the real incomes of the laboring poor, sharing widely the fruits of economic growth, and effecting a more egalitarian income distribution. In the eyes of many, the existence of legal minimum wage regimes and an active administration of these have become an important test of a government's concern for the welfare of its people, of its commitment to "social justice".


Latin American and Iberian Institute

Language (ISO)



Minimum Wage, Social Policy, Costa Rica