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Minimum wage compliance and household welfare: An analysis of over 1500 minimum wages in India

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  • Mansoor, Kashif
  • O'Neill, Donal

Abstract

In many developing countries there is a substantial difference between de jure and de facto regulation of minimum wages. We examine the consequences of this by looking at the heterogenous effects of minimum wages across compliance regimes in India. We show that minimum wages have a positive effect on wages, without a corresponding effect on employment. As a result, household consumption increases following increases in the minimum wage. However, the beneficial pass-through to wages and consumption is significantly reduced in low compliance regimes. Labour market reforms can improve workers’ living standards but only if accompanied by effective compliance.

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  • Mansoor, Kashif & O'Neill, Donal, 2021. "Minimum wage compliance and household welfare: An analysis of over 1500 minimum wages in India," World Development, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:wdevel:v:147:y:2021:i:c:s0305750x21002680
    DOI: 10.1016/j.worlddev.2021.105653
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    6. Mohit Sharma & Brinda Viswanathan, 2022. "Minimum Wages in the Presence of Wage and Non-Wage Sectors in India: An Exploratory Analysis of the Non-Farm Sector," Working Papers 2022-225, Madras School of Economics,Chennai,India.
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    More about this item

    Keywords

    Minimum wage; Compliance; Labour Market Regulation;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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