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Can minimum wages contribute to poverty reduction in poor countries?

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  • Stephen Devereux

    (Institute of Development Studies, University of Sussex, Brighton, UK)

Abstract

Minimum wage legislation aims to reduce poverty by raising the wages of the poorest workers towards or above the poverty line. Despite their intuitive appeal, minimum wages are controversial. The sceptics' argument that raising wages will create disemployment is compounded by the difficulties of enforcing compliance, particularly in poor countries with large informal sectors and weak public administrations. This paper draws on the 'new economics' of the minimum wage, and reviews evidence from several countries suggesting that positive impacts are achievable with negligible side-effects. The paper concludes by making a case for introducing selective minimum wages on Uganda's agricultural estates. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Stephen Devereux, 2005. "Can minimum wages contribute to poverty reduction in poor countries?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(7), pages 899-912.
  • Handle: RePEc:wly:jintdv:v:17:y:2005:i:7:p:899-912
    DOI: 10.1002/jid.1183
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    File URL: http://hdl.handle.net/10.1002/jid.1183
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    References listed on IDEAS

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    1. Boadway, Robin & Cuff, Katherine, 2001. "A minimum wage can be welfare-improving and employment-enhancing," European Economic Review, Elsevier, vol. 45(3), pages 553-576, March.
    2. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages 110-116, March.
    3. Haroon Bhorat, 2000. "Are Wage Adjustments an Effective Mechanism for Poverty Alleviation?: Some Simulations for Domestic and Farm Workers," Working Papers 00041, University of Cape Town, Development Policy Research Unit.
    4. William Maloney & Jairo Mendez, 2004. "Measuring the Impact of Minimum Wages. Evidence from Latin America," NBER Chapters,in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130 National Bureau of Economic Research, Inc.
    5. Alatas, Vivi & Cameron, Lisa, 2003. "The impact of minimum wages on employment in a low income country : an evaluation using the difference-differences approach," Policy Research Working Paper Series 2985, The World Bank.
    6. Bell, Linda A., 1995. "The impact of minimum wages in Mexico and Colombia," Policy Research Working Paper Series 1514, The World Bank.
    7. Ellis, Frank & Bahiigwa, Godfrey, 2003. "Livelihoods and Rural Poverty Reduction in Uganda," World Development, Elsevier, vol. 31(6), pages 997-1013, June.
    8. Strobl, Eric & Walsh, Frank, 2003. "Minimum Wages and Compliance: The Case of Trinidad and Tobago," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 427-450, January.
    9. Ashenfelter, Orley & Smith, Robert S, 1979. "Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 333-350, April.
    10. Lustig, N. & Mcleod, D., 1996. "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence," Papers 125, Brookings Institution - Working Papers.
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    Citations

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    Cited by:

    1. Gerry Rodgers, 2007. "Labour Market Flexibility and Decent Work," Working Papers 47, United Nations, Department of Economics and Social Affairs.
    2. repec:eee:wdevel:v:102:y:2018:i:c:p:135-157 is not listed on IDEAS
    3. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    4. Arvind Ashta, 2017. "Work-sharing from Different Angles: A literature review," Working Papers CEB 17-033, ULB -- Universite Libre de Bruxelles.
    5. Caren A. Grown, 2006. "Quick Impact Initiatives For Gender Equality: A Menu of Options," Economics Working Paper Archive wp_462, Levy Economics Institute.
    6. Andalón, Mabel & Pagés, Carmen, 2008. "Minimum Wages in Kenya," IZA Discussion Papers 3390, Institute for the Study of Labor (IZA).
    7. Rania Antonopoulos, 2007. "The Right to a Job, the Right Types of Projects: Employment Guarantee Policies from a Gender Perspective," Economics Working Paper Archive wp_516, Levy Economics Institute.

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