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Citation Information

Type Journal Article - Journal of Development Economics
Title Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa
Author(s)
Volume 99
Issue 1
Publication (Day/Month/Year) 2012
Page numbers 27 - 45
URL http://www.sciencedirect.com/science/article/pii/S0304387811001210
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 for domestic workers and no statistically significant effects on employment on the intensive or extensive margins. 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 strong 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.

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