Central Data Catalog

Citation Information

Type Journal Article - World Development
Title Minimum wages and household poverty: General equilibrium macro–micro simulations for South Africa
Author(s)
Issue 0
Publication (Day/Month/Year) 2011
Page numbers --0
URL http://www.sciencedirect.com/science/article/pii/S0305750X11002257
Abstract
Summary The poverty-reducing effects of minimum wages depend on its effectiveness in targeting the poor and the extent to which job losses and price increases offset income gains. We develop a general equilibrium microsimulation model to simulate the economywide effects of minimum wages in South Africa. We find minimum wages lead to a marginal decline in poverty and overall inequality. However, job losses are more likely to affect the poorest among minimum wage workers, while rising production costs reduce overall household welfare. The policy is not an effective anti-poverty tool in South Africa given poor targeting and adverse price effects, which are often unaccounted for in policy simulations.

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