Publication: The Impact of Minimum Wages on Employment in a Low-Income Country : A Quasi-natural Experiment in Indonesia
No Thumbnail Available
Published
2008
ISSN
00197939
Date
2012-03-30
Author(s)
Editor(s)
Abstract
The extensive literature on the employment impact of minimum wages has focused heavily on industrialized nations and very little on the developing world, despite the importance of minimum wages in many low-income countries. One such country, Indonesia, was the setting for an unusual quasi-natural experiment: not only did minimum wages in Indonesia increase sharply between 1990 and 1996, but the resultant increment in average wages varied markedly across different areas in Greater Jakarta. The authors use household-level labor market data to determine the extent of compliance with the legislation, then estimate the employment impact in the clothing, textiles, footwear, and leather industries based on a census of all large and medium-sized establishments. The evidence suggests that there was no negative employment impact for large establishments, either foreign or domestic, but that workers in smaller, domestic establishments may have suffered job losses as a result of minimum wage increases.
Link to Data Set
Digital Object Identifier
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Impact of Minimum Wages on Employment in a Low-Income Country : An Evaluation Using the Difference-in-Differences Approach(World Bank, Washington, DC, 2003-03)Unlike the well-developed literature on the employment impact of the minimum wage in industrial nations, very little is known about minimum wage effects in low income countries. Minimum wages increased sharply in Indonesia between 1990 and 1996 and by more in some provinces than in others. Following Card and Krueger (1994) the authors exploit the large geographic variation in the rate of increase and compare changes in employment in the clothing, textile, footwear, and leather industries on either side of the Jakarta-West Java border. They use household level labor market data to establish compliance with the legislation. They obtain matched difference-in-difference estimates of the employment impact using a census of all large and medium-size firms in the clothing, textile, leather, and footwear industries. The authors find some evidence of a negative employment impact for small, domestic firms but no employment impact for large firms, foreign or domestic.Publication Gender, Culture, and Corruption: Insights from an Experimental Analysis(2009)A substantial body of recent research looks at differences in the behavior of men and women in diverse economic transactions. We contribute to this literature by investigating gender differences in behavior when confronted with a common bribery problem. Our study departs from the previous literature on gender and corruption by using economic experiments. Based on data collected in Australia (Melbourne), India (Delhi), Indonesia (Jakarta), and Singapore, we show that while women in Australia are less tolerant of corruption than men in Australia, no significant gender differences are seen in India, Indonesia, and Singapore. Hence, our findings suggest that the gender differences reported in previous studies may not be as universal as stated, and may be more culture specific. We also explore behavioral differences by gender across countries and find larger variations in women's behavior toward corruption than in men's across the countries in our sample.Publication Nutrient Consumption and Household Income in Rural Mexico(2009)We estimate the income elasticity for a variety of macro- and micronutrients using a sample of poor rural households in Mexico. The nutrient-income elasticity is estimated using both parametric and semiparametric methods. A special focus is placed on the nonlinearity of the relationship between nutrient intake and income and on measurement error and endogeneity issues. One major finding is that income elasticity for calories is close to zero when we control for measurement error issues. For some nutrients, namely fats, vitamin A and C, calcium, and heme iron, we find a sizeable positive income elasticity robust to the choice of the estimator and percentiles at which it is evaluated. These nutrients are also those for which we find the largest deficiency in our sample. In addition, we find that for the poorest households in our sample, the deficiency of total energy, protein, and zinc is not accompanied by a positive income elasticity.Publication The Impact of the Global Financial Crisis on Off-Farm Employment and Earnings in Rural China(2011)This paper examines the effect of the financial crisis on off-farm employment of China's rural labor force. Using a national representative dataset, we find that there was a large impact. By April 2009 off-farm employment reached 6.8% of the rural labor force. Monthly earnings also declined. However, while we estimate that 49 million were laid-off between October 2008 and April 2009, half of them were re-hired in off-farm work by April 2009. By August 2009, less than 2% of the rural labor force was unemployed due to the crisis. The robust recovery appears to have helped avoid instability.Publication Urban Proximity, Agricultural Potential and Rural Non-farm Employment: Evidence from Bangladesh(2009)This paper presents empirical evidence on the relative importance of farm and urban linkages for rural non-farm employment in Bangladesh. The results suggest that people are more likely to be employed in well-paid wage employment and self-employment in the non-farm sector if they are closer to urban centers. Those who are further away from such centers are even less likely to be in well-paying non-farm jobs if they are living in areas with greater agricultural potential. The empirical results highlight the need for improved connectivity of regions with higher agricultural potential to urban centers for non-farm development in Bangladesh.
Users also downloaded
Showing related downloaded files
No results found.