Minimum Wages for Domestic Workers: Impact Evaluation of the Indian Experience
GLO Discussion Paper Series 294, Global Labor Organization (GLO); Older WP: Centre for Finance and Development, Working Paper number 5|2015, IHEID, Geneva
55 Pages Posted: 8 Apr 2015 Last revised: 17 Jun 2019
Date Written: April 16, 2019
The paper empirically explores the following question, does minimum wage legislation have an impact on wages and employment opportunities in an informal sector of a large developing country? We answer this question in the context of a minimum wage legislation for domestic workers in four Indian states. Combining matching procedures with difference-in-difference estimation, the paper estimates both the short-run and the long-run impact of the legislation on real wages and employment opportunities. Results show a positive impact of the legislation on real wages in the short-run, with no significant impact in the long-run. Further, the legislation did not have any impact on the extensive margin in terms of employment opportunities or the probability of being employed as a domestic worker over the entire period. Available evidence, in line with theoretical predictions, point towards a weak enforcement of the legislation as the main driving factor of observed results.
Keywords: wages; minimum wages; domestic workers; unemployment; informal sector
JEL Classification: J16; J31; J33; J38
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