A theory of compliance with minimum wage legislation
AbstractIn this paper, we introduce firm heterogeneity in the context of a model of non-compliance with minimum wage legislation. The introduction of heterogeneity in the ease with which firms can be monitored for non compliance allows us to show that non-compliance will persist in sectors which are relatively difficult to monitor, despite the government implementing non stochastic monitoring. Moreover, we show that the incentive not to comply is an increasing function of the level of the minimum wage and increasing function of the gap between the minimum wage and the competitive wage rate
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39499.
Date of creation: 2012
Date of revision:
Minimum wage legislation; Employment ; Informal sector in LDCs ; Government Policy;
Find related papers by JEL classification:
- J8 - Labor and Demographic Economics - - Labor Standards
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-IUE-2012-06-25 (Informal & Underground Economics)
- NEP-LAB-2012-06-25 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stigler, George J, 1970.
"The Optimum Enforcement of Laws,"
Journal of Political Economy,
University of Chicago Press, vol. 78(3), pages 526-36, May-June.
- Cahuc, P. & Michel, P., 1992.
"Minimum Wage, Unemployment and Growth,"
Papiers d'Economie MathÃÂ©matique et Applications
92.35, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Grenier, Gilles, 1982. "On Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 184-87, February.
- Azam, Jean-Paul, 1992. "The Agricultural Minimum Wage and Wheat Production in Morocco (1971-89)," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 1(2), pages 171-91, August.
- Yaniv, Gideon, 1994. "Complaining about noncompliance with the minimum wage law," International Review of Law and Economics, Elsevier, vol. 14(3), pages 351-362, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.