Minimum wage compliance and household welfare: An analysis of over 1500 minimum wages in India

Kashif Mansoor and Donal O'Neill

World Development, 2021, vol. 147, issue C

Abstract: In many developing countries there is a substantial difference between de jure and de facto regulation of minimum wages. We examine the consequences of this by looking at the heterogenous effects of minimum wages across compliance regimes in India. We show that minimum wages have a positive effect on wages, without a corresponding effect on employment. As a result, household consumption increases following increases in the minimum wage. However, the beneficial pass-through to wages and consumption is significantly reduced in low compliance regimes. Labour market reforms can improve workers’ living standards but only if accompanied by effective compliance.

Keywords: Minimum wage; Compliance; Labour Market Regulation (search for similar items in EconPapers)
JEL-codes: J38 O15 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:147:y:2021:i:c:s0305750x21002680

DOI: 10.1016/j.worlddev.2021.105653

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