Can Minimum Wages Effectively Reduce Poverty under Low Compliance? A Case Study from the Agricultural Sector in South Africa
Bibliographic Data
| ID | 12229052 |
|---|---|
| Authors | Ihsaan Bassier (0000-0001-8793-2182, Centre for Economic Performance, London School of Economics and Political Science, and Southern Africa Labour and Development Research Unit, University of Cape Town, Cape Town, South Africa), Vimal Ranchhod (0000-0003-0365-5873, University of Cape Town, corresponding author) |
| Year | 2024 |
| Volume | 36 |
| Issue | 2 |
| Pages | 398-419 |
| Publication date | 2024-04-02 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Review of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0953-8259 • E-ISSN: 1465-3982 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/09538259.2024.2318957 |
| OpenAlex | W4393941784 |
| Language | EN |
| Citations received | 2 |
| References cited | 20 |
What were the effects of a 52 per cent increase in the minimum wage in the agricultural sector in South Africa in 2013?We estimate the short run effects of this policy change on the income, employment, and poverty rate of farmworkers, using individual-level panel data from the Quarterly Labour Force Surveys (QLFS).Before the implementation date, 90 per cent of farmworkers were paid below the new minimum wage level.We find that the wage gain of farmworkers is strongly quadratically related to pre-implementation wages, suggesting lower compliance as the gap between the minimum and the preimplementation wage increases.We estimate that farmworkers received a median wage increase of 9 per cent as a result of the policy, and we find no evidence of job losses.Overall, farmworkers were 7 per cent less likely to have household income per person below the poverty line.One possible explanation for these outcomes is that endogenous compliance may mitigate against unemployment effects.While the minimum wage literature is large, our paper adds to the small subset of this literature on large increases, partial compliance, and poverty effects
Agricultural economics · Agriculture · Compliance (psychology · Development economics · Economic growth · Economics · Geography · Labour economics · Poverty · Employment and Welfare Studies · Poverty, Education, and Child Welfare · Taxation and Compliance Studies
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| Citations per year | 1 |
|---|---|
| Citation span | 2024 - 2025 (2) |
| Highly cited | No |