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Public enforcement/private monitoring: Evaluating a new approach to regulating the minimum wage

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  • David Weil
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    Abstract

    This paper examines compliance with federal minimum wage laws in the U.S. apparel industry and analyzes the impact of new methods of intervention designed to improve regulatory performance. Drawing on data from a randomized survey of apparel contractors, the author evaluates the impact of agreements between manufacturers and the government used to monitor contractor behavior as a means of improving compliance outcomes. Several non-regulatory variables predicted by theory to be important influences--the level of work skills, for example, and product market factors related to the elasticity of labor demand--are indeed found to be correlated with compliance. Nonetheless, stringent forms of contractor monitoring are associated with substantial reductions in violations of minimum wage standards. The results suggest that welldesigned public/private monitoring efforts can lead to significant improvements in compliance with labor standards. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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    Bibliographic Info

    Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

    Volume (Year): 58 (2005)
    Issue (Month): 2 (January)
    Pages: 238-257

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    Handle: RePEc:ilr:articl:v:58:y:2005:i:2:p:238-257

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    Cited by:
    1. Dinkelman, Taryn & Ranchhod, Vimal, 2011. "Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa," CEPR Discussion Papers 8682, C.E.P.R. Discussion Papers.
    2. Kim, Jee Young, 2013. "The Politics of Code Enforcement and Implementation in Vietnam’s Apparel and Footwear Factories," World Development, Elsevier, vol. 45(C), pages 286-295.
    3. Kryuchkova, P. & Avdasheva, S., 2012. "Public and Private Enforcement of Law under the High Risk of Type I Errors: the Russian Case," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 114-140.
    4. Leif Danziger, 2009. "Endogenous Monopsony and the Perverse Effect of the Minimum Wage in Small Firms," CESifo Working Paper Series 2740, CESifo Group Munich.
    5. Leif Danziger, 2009. "Noncompliance and the Effects of the Minimum Wage on Hours and Welfare in Competitive Labor Markets," CESifo Working Paper Series 2786, CESifo Group Munich.
    6. Danziger, Eliav & Danziger, Leif, 2014. "A Pareto-Improving Minimum Wage," IZA Discussion Papers 8123, Institute for the Study of Labor (IZA).
    7. Eliav Danziger & Leif Danziger, 2014. "A Pareto-Improving Minimum Wage," CESifo Working Paper Series 4762, CESifo Group Munich.
    8. Knorringa, P., 2007. "Asian drivers and the future of responsible production and consumption: exploring a research question and hypotheses for future research," ISS Working Papers - General Series 18752, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

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