Minimum Wages and Labor Supply in an Emerging Market: The Case of Mauritius

35 Pages Posted: 19 Dec 2018 Last revised: 20 Dec 2018

See all articles by Zaakhir Asmal

Zaakhir Asmal

University of Cape Town (UCT)

Haroon Ismail Bhorat

University of Cape Town (UCT)

Ravi Kanbur

Cornell University; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Marco Ranzani

World Bank

Pierella Paci

World Bank

Date Written: December 18, 2018

Abstract

This paper investigates the effect of multiple minimum wages, known as remuneration orders, on employment and working hours in Mauritius. Using data between 2004 and 2014, the analysis indicates that a 10 percent increase in the minimum wages brings about a slightly positive effect on employment in the covered sector, with an estimated employment elasticity of 0.113, which is within the range of elasticities found in previous studies of employment effects of minimum wages in low- and middle-income countries. The positive employment effect of minimum wages is also associated with a 2.3 percent increase in average working hours for men but a 1.8 percent decline in average working hours for women in the covered sector. In the uncovered sector, the significant positive effect along the intensive margin, estimated at 4.2 percent, is driven by changes in labor supply among men.

Suggested Citation

Asmal, Zaakhir and Bhorat, Haroon Ismail and Kanbur, Ravi and Ranzani, Marco and Paci, Pierella, Minimum Wages and Labor Supply in an Emerging Market: The Case of Mauritius (December 18, 2018). World Bank Policy Research Working Paper No. 8681. Available at SSRN: https://ssrn.com/abstract=3303598

Zaakhir Asmal (Contact Author)

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Haroon Ismail Bhorat

University of Cape Town (UCT)

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Ravi Kanbur

Cornell University ( email )

301-J Warren Hall
Ithaca, NY 14853
United States
607-255-7966 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://www.kanbur.dyson.cornell.edu

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Marco Ranzani

World Bank

Pierella Paci

World Bank ( email )

Washington, DC 20433
United States

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