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The impact of minimum wage legislation in developing countries where coverage is incomplete

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  • Patricia Jones

Abstract

This paper examines the impact of minimum wage legislation in developing countries where coverage is incomplete. Using a rich data set from Ghana, it estimates the extent to which a binding minimum wage alters employment in both the formal and informal sectors of the labor market. The data reveal that Ghana’s minimum wage policies during the 1970s and 1980s led to a reduction of formal sector jobs and an increase in informal sector jobs. In addition, there is some evidence to suggest that a large proportion of the displaced workers from the formal sector ended up working in the informal sector.

Suggested Citation

  • Patricia Jones, 1998. "The impact of minimum wage legislation in developing countries where coverage is incomplete," CSAE Working Paper Series 1998-02, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:1998-02
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    File URL: https://ora.ox.ac.uk/objects/uuid:2399119f-dcfe-4155-85b4-2fe81692ca27
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    References listed on IDEAS

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    1. Alida Castillo Freeman & Richard B. Freeman, 1991. "Minimum Wages in Puerto Rico: Textbook Case of a Wage Floor?," NBER Working Papers 3759, National Bureau of Economic Research, Inc.
    2. Bell, Linda A., 1995. "The impact of minimum wages in Mexico and Colombia," Policy Research Working Paper Series 1514, The World Bank.
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    Cited by:

    1. Mr. Christopher S Adam & Mr. Edward F Buffie, 2020. "The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence," IMF Working Papers 2020/023, International Monetary Fund.
    2. Betcherman, Gordon, 2014. "Labor market regulations : what do we know about their impacts in developing countries ?," Policy Research Working Paper Series 6819, The World Bank.
    3. Atif Khan Jadoon & Abeera Tanveer & Maria Faiq Javed & Ambreen Sarwar, 2021. "Minimum Wages and Poverty: A Cross-Country Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(8), pages 632-643, August.
    4. Mr. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence," IMF Working Papers 1997/152, International Monetary Fund.
    5. Anthony Murphy & Eric Strobl, 2008. "Employer and Employee Ignorance in Developing Countries: The Case of Trinidad and Tobago," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 339-353, May.

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    More about this item

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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