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Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa

Taryn Dinkelman and Vimal Ranchhod
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Vimal Ranchhod: University of Cape Town

No 1254, Working Papers from Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies.

Abstract: What happens when a previously uncovered labor market is regulated? We exploit the introduction of a minimum wage in South Africa and variation in the intensity of this law to identify increases in wages and formal contract coverage, and no significant effects on employment on the intensive or extensive margins for domestic workers. These large, partial responses to the law are somewhat surprising, given the lack of monitoring and enforcement in this informal sector. We interpret these changes as evidence that external sanctions are not necessary for new labor legislation to have a significant impact on informal sectors of developing countries, at least in the short-run.

Keywords: Minimum wage; informal sector; Africa (search for similar items in EconPapers)
JEL-codes: J08 J21 J30 J80 (search for similar items in EconPapers)
Date: 2010-07
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Related works:
Journal Article: Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa (2012) Downloads
Working Paper: Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa (2011) Downloads
Working Paper: Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa (2010) Downloads
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