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

See all articles by Rohan Gudibande

Rohan Gudibande

Woodrow Wilson School of International and Public Affairs, Princeton University

Arun Jacob

Graduate Institute of International and Development Studies (IHEID); United Nations - Conference on Trade and Development (UNCTAD)

Date Written: April 16, 2019

Abstract

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

Suggested Citation

Gudibande, Rohan and Jacob, Arun, Minimum Wages for Domestic Workers: Impact Evaluation of the Indian Experience (April 16, 2019). GLO Discussion Paper Series 294, Global Labor Organization (GLO); Older WP: Centre for Finance and Development, Working Paper number 5|2015, IHEID, Geneva. Available at SSRN: https://ssrn.com/abstract=2591395 or http://dx.doi.org/10.2139/ssrn.2591395

Rohan Gudibande (Contact Author)

Woodrow Wilson School of International and Public Affairs, Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Arun Jacob

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

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