Minimum Wages in Developing Countries : Helping or Hurting Workers?
This policy note reviews the literature on the effects of minimum wages on labor markets in developing countries. The authors begin by elucidating the challenges to ascertaining these effects, especially in developing economies where a large segmen...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/12/10158898/minimum-wages-developing-countries-helping-or-hurting-workers http://hdl.handle.net/10986/11742 |
| Summary: | This policy note reviews the literature
on the effects of minimum wages on labor markets in
developing countries. The authors begin by elucidating the
challenges to ascertaining these effects, especially in
developing economies where a large segment of the workforce
is not covered by minimum wage legislation (uncovered
sector). After summarizing the theoretical models and their
predictions, the authors review the empirical evidence of
the impact of minimum wage legislation on wages, employment,
and unemployment in the covered and uncovered sectors of the
labor market. The evidence strongly suggests that an
increase in the minimum wage tends to have a positive wage
effect and a small negative employment effect among workers
covered by minimum wage legislation and that the effects
tend to be stronger among low-wage workers. The findings are
quite limited and fairly inconclusive on the indirect
effects of increases in minimum wages on workers in the
uncovered sectors, where the legislation either does not
apply or is not complied with. |
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