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Minimum Wages and Youth: The Case of South Africa

Author

Listed:
  • Haroon Bhorat
  • Aalia Cassim
  • Ravi Kanbur
  • Benjamin Stanwix
  • Derek Yu

Abstract

This article applies the econometric methods of the new minimum wage literature to assess the impact of minimum wages on employment, wages and non-wage benefits for youth in South Africa. We find a statistically significant but small decline in youth employment in Agriculture. In addition, a small but significant increase in youth employed in Retail and the Taxi sector is observed. For the other sectors, we find no effect. There is a positive wage effect for young people in four of the six minimum wage sectors in our preferred estimation. At the intensive margin, hours of work were adjusted downward in three of the six minimum wage sectors and increased in the post-law period for one sector. It is only in one sector, Retail, where the law appears to have increased the probability of having a written employment contract. In addition, we measure minimum wage violation and find significant levels of non-compliance with the law for a large cohort of young people in South Africa.

Suggested Citation

  • Haroon Bhorat & Aalia Cassim & Ravi Kanbur & Benjamin Stanwix & Derek Yu, 2016. "Minimum Wages and Youth: The Case of South Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 25(suppl_1), pages 61-102.
    • Handle: RePEc:oup:jafrec:v:25:y:2016:i:suppl_1:p:i61-i102.
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    File URL: http://hdl.handle.net/10.1093/jae/ejv029
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    Cited by:

    1. Mr. Christopher S Adam & Mr. Edward F Buffie, 2020. "The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence," IMF Working Papers 2020/023, International Monetary Fund.
    2. Asiya Maskaeva & Mgeni Msafiri, 2021. "Youth unemployment hysteresis in South Africa: Macro-micro analysis," WIDER Working Paper Series wp-2021-20, World Institute for Development Economic Research (UNU-WIDER).

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