Estimating the Causal Effect of Enforcement on Minimum Wage Compliance: The Case of South Africa

Haroon Bhorat, Ravi Kanbur and Natasha Mayet ()
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Natasha Mayet: Development Policy Research Unit

Working Papers from University of Cape Town, Development Policy Research Unit

Abstract: This paper attempts to estimate the causal effect of government enforcement on compliance with minimum wages in South Africa, a country where considerable non-compliance exists. The number of labour inspectors per capita is used as a proxy for enforcement, whilst non-compliance is measured using an index of violation that measures both the proportion of individuals violated, as well as the average depth of individual violation. Due to the potential simultaneity between enforcement and compliance, the number of labour inspectors is instrumented by the number of non-inspectors. The results suggest that there are a variety of factors impacting on violation, including firm-level, sectoral and spatial characteristics. One of the key determinants of violation is found to be the local unemployment rate. However, the number of labour inspectors is found to be insignificant in determining non-compliance.

Keywords: Minimum Wage; Enforcement; Compliance; Depth of Violation; South Africa (search for similar items in EconPapers)
JEL-codes: A1 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2011-11
New Economics Papers: this item is included in nep-afr, nep-dev and nep-lab
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Citations: View citations in EconPapers (5)

Published in Working Paper Series by the Development Policy Research Unit, November 2011, pages 1-17

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http://hdl.handle.net/11427/7291 First version, 2011 (application/pdf)

Related works:
Journal Article: Estimating the Causal Effect of Enforcement on Minimum Wage Compliance: The Case of S outh A frica (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ctw:wpaper:11145

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