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Minimum Wage Law for Domestic Workers: Impact Evaluation of the Indian Experience

Rohan Gudibande () and Arun Jacob

No 05-2015, CFD Working Papers from Centre for Finance and Development, The Graduate Institute

Abstract: We conduct an impact evaluation of the minimum wage legislation for domestic workers that was introduced in four states in India over the period of 2004-2012. Combining the matching and differencein-difference estimation strategies we estimate both the short-run and long-run impacts of the legislation on real wages and on employment opportunities. Our results show a positive impact of the legislation on real wages in the short-run, albeit of very small magnitude.However, the legislation seems to have no impact on real wages in the long-run. Further, the legislation did not seem to have had any impact on the extensive margin in terms of employment opportunities or the probability of being employed as a domestic worker in both the short and long run. Our conclusion is that minimum wage legislation for domestic workers need not improve the living standards of workers unless accompanied by strong enforcement mechanisms. To our knowledge, this is the first attempt at quantitatively evaluating the impact of minimum wage legislation for domestic workers in India.

Keywords: wages; minimum wages; labour demand; domestic workers; India; trade unions; unemployment; informal sector (search for similar items in EconPapers)
JEL-codes: J08 J16 J31 J33 J48 J51 J64 J83 O15 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2014-01-01, Revised 2015-04-07
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