Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152414
Authors: 
Bhorat, Haroon
Kanbur, Ravi
Stanwix, Benjamin
Year of Publication: 
2015
Citation: 
[Journal:] IZA Journal of Labor & Development [ISSN:] 2193-9020 [Volume:] 4 [Year:] 2015 [Issue:] 18 [Pages:] 1-20
Abstract: 
In many developing countries, a significant portion of the wage distribution is found below the legal minimum wage. In order to fully understand the nature of this non-compliance, we need to compare the counterfactual wage distribution without the minimum wage law to the current wage distribution. Such a comparison could reveal partial compliance, where employers raise wages some of the way to the minimum wage, to balance out the benefits of non-compliance with the costs and penalties to the extent that they depend on the gap between the legal minimum wage and the wage actually paid. This paper presents a simple model of such partial compliance and uses its predictions to structure an empirical investigation of the impact of introducing a minimum wage law for agricultural workers in South Africa. We find that partial compliance is indeed taking place and further, the lowest wages are being raised disproportionately, consistent with the predictions of the model.
Subjects: 
Minimum Wages
South Africa
Compliance
Enforcement
Agriculture
Index of Minimum Wage Violation
Wage
JEL: 
J23
J25
J31
J32
J38
J43
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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