Productivity, non-compliance and the minimum wage
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Productivity, non-compliance and the minimum wage
Eliane Badaoui and Frank Walsh
(forthcoming in the Journal of Development Economics and available online at:
(opens in a new window)https://www.sciencedirect.com/science/article/pii/S0304387821001383)
The paper:
•Shows that output per worker is less than the minimum wage for many developing
country firms so that they could not comply with the minimum wage
•Develops a model rationalising why governments may implicitly tolerate non-
compliance amongst low productivity firms, where inspections of firms by labour
inspectors are instigated by worker complaints
•Documents that worker complaints are the primary instigator of minimum wage
inspections.