Minimum Wages and Poverty in a Developing Country: Simulations from Indonesia's Household Survey

Kelly Bird and Chris Manning

World Development, 2008, vol. 36, issue 5, 916-933

Abstract: Summary This study focuses on minimum wages, income distribution, and poverty, taking Indonesia as a case study. A simulation approach assesses who benefits and who pays for minimum wage increases. Among the poor, a minimum wages increase boosts net incomes for 21% of the households, while it results in net losses to 79% of the households. The impact is slightly less severe when there are job losses. Although minimum wage increases are mildly progressive (the non-poor pay a higher share of the costs), they are unlikely to be an effective antipoverty instrument in developing countries like Indonesia.

Date: 2008
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Working Paper: Minimum Wages and Poverty in a Developing Country: Simulations from Indonesia's Household Survey (2005)
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