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Minimum Wages in Sub-Saharan Africa: A Primer

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  • Haroon Bhorat
  • Ravi Kanbur
  • Benjamin Stanwix

Abstract

The fraction of workers currently covered by minimum wages in Sub-Saharan Africa (SSA) is small, but as formality and urbanization increase, wage regulation will become increasingly relevant. In this analysis, we find that higher minimum wage values are associated with higher levels of GDP per capita, in both SSA and non-SSA countries. Using two measures to assess the level at which minimum wages are set, we find that minimum wages in SSA countries are on average lower—relative to average wages—than most other comparable regions of the world. Thus, SSA as a whole reflects no particular bias toward a comparatively more pro–minimum wage policy. Within SSA, however, we observe that low-income countries set relatively higher minimum wages than middle- or upper-income countries. We find significant variation in the detail of minimum wage regimes and schedules in the region, as well as large variations in compliance. Notably, several countries in SSA have relatively complex minimum wage schedules, and on average we find high levels of noncompliance among covered workers. We also summarize the limited research on the employment effects of minimum wages in SSA, which are consistent with global results. By and large, introducing and raising the minimum wage appears to have small negative employment impacts or no statistically significant negative impacts. There are country studies, however, where substantial negative effects on employment are reported—often for specific cohorts. The release of country-level earnings and employment data at regular intervals lies at the heart of a more substantive, country-focused minimum wage research agenda for Africa.

Suggested Citation

  • Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2017. "Minimum Wages in Sub-Saharan Africa: A Primer," World Bank Research Observer, World Bank Group, vol. 32(1), pages 21-74.
  • Handle: RePEc:oup:wbrobs:v:32:y:2017:i:1:p:21-74.
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    4. Goraus-Tanska, Karolina & Lewandowski, Piotr, 2016. "Minimum Wage Violation in Central and Eastern Europe," IZA Discussion Papers 10098, Institute for the Study of Labor (IZA).
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    6. Andrea Garnero, 2018. "The dog that barks doesn’t bite: coverage and compliance of sectoral minimum wages in Italy," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-24, December.

    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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