A theory of compliance with minimum wage law

Simplice Asongu and Mohamed Jellal ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we introduce firm heterogeneity in the context of a model of non-compliance with minimum wage legislation. The introduction of heterogeneity in the ease with which firms can be monitored for non compliance allows us to show that non-compliance will persist in sectors which are relatively difficult to monitor, despite the government implementing non stochastic monitoring. Moreover, we show that the incentive not to comply is an increasing function of the level of the minimum wage and increasing function of the gap between the minimum wage and the competitive wage rate.

Keywords: Minimum wage legislation; Compliance; Incentives; Informal sector (search for similar items in EconPapers)
JEL-codes: J3 K31 K42 L51 M54 O17 (search for similar items in EconPapers)
Date: 2014-07-15
New Economics Papers: this item is included in nep-iue and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/57335/1/MPRA_paper_57335.pdf original version (application/pdf)

Related works:
Working Paper: A Theory of Compliance with Minimum Wage Law (2014)
Working Paper: A Theory of Compliance with Minimum Wage Law (2014)
Working Paper: A Theory of Compliance with Minimum Wage Law (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:57335

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