MINIMUM WAGES IN SUB-SAHARAN AFRICA: A PRIMER

Haroon Bhorat, Ravi Kanbur and Benjamin Stanwix

No 250019, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: Although the sectors and fraction of workers covered are small given the low rates of formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers grows wage regulation will become increasingly significant. We find that higher minimum wage values are associated with higher GDP per capita. Importantly, however, we find that the minimum wage relative to the mean wage is higher in low income countries than in lower- and upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world. There is limited research on the employment effect of minimum wages in SSA, but the few findings are consistent with the broad summary of global research. By and large, introducing and raising the minimum wage has a small negative impact or no measurable negative impact. However, there is significant variation around this average finding – the employment elasticities are not constant nor linear. Where increases in a minimum wage are large and immediate, this can result in employment losses, but more modest increases usually have very little observably adverse effects and may have positive impacts on wages. The great variability in findings on employment could be due partly to the great variation in the detail of the minimum wage regimes and schedules country by country, but also by the variations in compliance. We find that higher Kaitz indices are associated with higher levels of non-compliance. The release of country-level earnings and employment data at regular intervals lies at the heart of a future countryfocused minimum wage research agenda for Africa.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 38
Date: 2015-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://ageconsearch.umn.edu/record/250019/files/Cornell-Dyson-wp1510.pdf (application/pdf)

Related works:
Journal Article: Minimum Wages in Sub-Saharan Africa: A Primer (2017)
Working Paper: Minimum Wages in Sub-Saharan Africa: A Primer (2015)
Working Paper: Minimum Wages in Sub-Saharan Africa: A Primer (2015)
Working Paper: Minimum Wages in Sub-Saharan Africa: A Primer (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:250019

DOI: 10.22004/ag.econ.250019

Access Statistics for this paper

More papers in Working Papers from Cornell University, Department of Applied Economics and Management Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().