Advanced Search
MyIDEAS: Login to save this paper or follow this series

Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa

Contents:

Author Info

  • Taryn Dinkelman

    (Princeton University)

  • Vimal Ranchhod

    (University of Cape Town)

Abstract

What happens when a previously uncovered labor market is regulated? We exploit the in- troduction of a minimum wage in South Africa and variation in the intensity of this law to identify increases in wages and formal contract coverage, and no signi cant e ects on employment on the intensive or extensive margins for domestic workers. These large, partial responses to the law are somewhat surprising, given the lack of monitoring and enforcement in this informal sector. We interpret these changes as evidence that external sanctions are not necessary for new labor legislation to have a signi cant impact on informal sectors of developing countries, at least in the short-run.

Download Info

If 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.
File URL: http://www.princeton.edu/rpds/papers/dinkelman_ranchhod_minwages_0710.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. in its series Working Papers with number 1254.

as in new window
Length:
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:pri:rpdevs:dinkelman_ranchhod_minwages_0710

Contact details of provider:
Postal: 208 Fisher Hall, Princeton, NJ 08544
Phone: (609) 258 - 6403
Fax: (609) 258 - 5974
Web page: http://www.princeton.edu/%7Erpds/index.html
More information through EDIRC

Related research

Keywords: Minimum wage; informal sector; Africa;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Alexandre Mas, 2006. "Pay, Reference Points, and Police Performance," NBER Working Papers 12202, National Bureau of Economic Research, Inc.
  2. Falk, Armin & Fehr, Ernst & Zehnder, Christian, 2005. "The Behavioral Effects of Minimum Wages," IZA Discussion Papers 1625, Institute for the Study of Labor (IZA).
  3. Patricia Cort�s & Jessica Pan, 2013. "Outsourcing Household Production: Foreign Domestic Workers and Native Labor Supply in Hong Kong," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 31(2), pages 327 - 371.
  4. David Neumark & William Wascher, 1995. "Minimum wage effects on school and work transitions of teenagers," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 95-7, Board of Governors of the Federal Reserve System (U.S.).
  5. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, American Economic Association, vol. 74(2), pages 79-83, May.
  6. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 9406, Universite de Montreal, Departement de sciences economiques.
  7. Cortes, Kalena E., 2004. "Wage Effects on Immigrants from an Increase in the Minimum Wage Rate: An Analysis by Immigrant Industry Concentration," IZA Discussion Papers 1064, Institute for the Study of Labor (IZA).
  8. Ashenfelter, Orley & Smith, Robert S, 1979. "Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(2), pages 333-50, April.
  9. Tom Hertz, 2005. "The Effect of Minimum Wages on the Employment and Earnings of South Africa's Domestic Service Workers," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 05-120, W.E. Upjohn Institute for Employment Research.
  10. Gindling, T. H. & Terrell, Katherine, 2004. "Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica," IZA Discussion Papers 1018, Institute for the Study of Labor (IZA).
  11. Neumark, David & Wascher, William, 2007. "Minimum Wages and Employment," IZA Discussion Papers 2570, Institute for the Study of Labor (IZA).
  12. Akerlof, George A & Yellen, Janet L, 1988. "Fairness and Unemployment," American Economic Review, American Economic Association, American Economic Association, vol. 78(2), pages 44-49, May.
  13. ArnabK. Basu & NancyH. Chau & Ravi Kanbur, 2010. "Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 120(543), pages 244-269, 03.
  14. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  15. Nicola Branson, 2009. "Re-weighting the OHS and LFS National household Survey Data to create a consistent series over time: A Cross Entropy Estimation Approach," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 38, Southern Africa Labour and Development Research Unit, University of Cape Town.
  16. John R. Lott Jr. & Russell D. Roberts, 1995. "The Expected Penalty for Committing a Crime: An Analysis of Minimum Wage Violations," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 397-408.
  17. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
  18. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 15(3), pages S102-35, July.
  19. David Weil, 2005. "Public enforcement/private monitoring: Evaluating a new approach to regulating the minimum wage," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(2), pages 238-257, January.
  20. Rebitzer, James B. & Taylor, Lowell J., 1995. "The consequences of minimum wage laws Some new theoretical ideas," Journal of Public Economics, Elsevier, Elsevier, vol. 56(2), pages 245-255, February.
  21. Brown, Charles, 1988. "Minimum Wage Laws: Are They Overrated?," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 133-45, Summer.
  22. Besley, Timothy J. & Burgess, Robin, 2002. "Can Labour Regulation Hinder Economic Performance? Evidence from India," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3260, C.E.P.R. Discussion Papers.
  23. Squire, Lyn & Suthiwart-Narueput, Sethaput, 1997. "The Impact of Labor Market Regulations," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 119-43, January.
  24. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, Econometric Society, vol. 65(4), pages 833-860, July.
  25. David E. Bloom & Gilles Grenier, 1986. "Models of Firm Behavior Under Minimum Wage Legislation," NBER Working Papers 1877, National Bureau of Economic Research, Inc.
  26. Grenier, Gilles, 1982. "On Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(1), pages 184-87, February.
  27. David S. Lee, 1999. "WAGE INEQUALITY IN THE UNITED STATES DURING THE 1980s: RISING DISPERSION OR FALLING MINIMUM WAGE?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 977-1023, August.
  28. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, Elsevier, vol. 16(2), pages 224-237, April.
  29. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  30. I. M. Rubinow, 1906. "The Problem of Domestic Service," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 14, pages 502.
  31. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(4), pages 543-69, November.
  32. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
  33. Chang, Yang-Ming & Ehrlich, Isaac, 1985. "On the Economics of Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(1), pages 84-91, February.
  34. Yang-Ming Chang, 1992. "Noncompliance Behavior of Risk-Averse Firms Under the Minimum Wage Law," Public Finance Review, , vol. 20(3), pages 390-401, July.
  35. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(497), pages 684-708, 07.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bhorat, Haroon & Kanbur, Ravi & Mayet, Natasha, 2013. "The Impact of Sectoral Minimum Wage Laws on Employment, Wages, and Hours of Work in South Africa," Working Papers, Cornell University, Department of Applied Economics and Management 180096, Cornell University, Department of Applied Economics and Management.
  2. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2012. "Estimating the Impact of Minimum Wages on Employment, Wages and Non-wage Benefits: The Case of Agriculture in South Africa," Working Papers, University of Cape Town, Development Policy Research Unit 12149, University of Cape Town, Development Policy Research Unit.
  3. Ronelle Burger & Marisa Coetzee & Carina van der Watt, 2013. "Estimating the benefits of linking ties in a deeply divided society: considering the relationship between domestic workers and their employers in South Africa," Working Papers 18/2013, Stellenbosch University, Department of Economics.
  4. Xiao-yuan Dong & Jin Feng & Yangyang Yu, 2014. "Relative Pay and its Underlying Determinants for Domestic Eldercare Workers in Urban China," Departmental Working Papers, The University of Winnipeg, Department of Economics 2014-01, The University of Winnipeg, Department of Economics.
  5. Levinsohn, James & Pugatch, Todd, 2014. "Prospective analysis of a wage subsidy for Cape Town youth," Journal of Development Economics, Elsevier, Elsevier, vol. 108(C), pages 169-183.
  6. Pauw, Karl & Leibbrandt, Murray, 2012. "Minimum Wages and Household Poverty: General Equilibrium Macro–Micro Simulations for South Africa," World Development, Elsevier, Elsevier, vol. 40(4), pages 771-783.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pri:rpdevs:dinkelman_ranchhod_minwages_0710. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Long).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.