The Impact of Minimum Wages on Employment in a Low-Income Country : An Evaluation Using the Difference-in-Differences Approach
Unlike the well-developed literature on the employment impact of the minimum wage in industrial nations, very little is known about minimum wage effects in low income countries. Minimum wages increased sharply in Indonesia between 1990 and 1996 and...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/03/2166850/impact-minimum-wages-employment-low-income-country-evaluation-using-difference-differences-approach http://hdl.handle.net/10986/18313 |
| Summary: | Unlike the well-developed literature on
the employment impact of the minimum wage in industrial
nations, very little is known about minimum wage effects in
low income countries. Minimum wages increased sharply in
Indonesia between 1990 and 1996 and by more in some
provinces than in others. Following Card and Krueger (1994)
the authors exploit the large geographic variation in the
rate of increase and compare changes in employment in the
clothing, textile, footwear, and leather industries on
either side of the Jakarta-West Java border. They use
household level labor market data to establish compliance
with the legislation. They obtain matched
difference-in-difference estimates of the employment impact
using a census of all large and medium-size firms in the
clothing, textile, leather, and footwear industries. The
authors find some evidence of a negative employment impact
for small, domestic firms but no employment impact for large
firms, foreign or domestic. |
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