Estimating the Impact of Minimum Wages on Employment, Wages and Non-wage Benefits: The Case of Agriculture in South Africa

Haroon Bhorat, Ravi Kanbur and Benjamin Stanwix ()
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Benjamin Stanwix: Development Policy Research Unit

Working Papers from University of Cape Town, Development Policy Research Unit

Abstract: Assessments of the impact of minimum wages on labour market outcomes in Africa are relatively rare. In part this is because the data available do not permit adequate treatment of econometric issues that arise in such an assessment. This paper attempts to estimate the impact of the introduction of a minimum wage law within the Agriculture sector in South Africa, based on 15 waves of the biannual Labour Force Survey (LFS), starting in September 2000 and ending in September 2007. The chosen sample includes six waves before the legislations effective date (March 2003) and nine afterwards. All 15 waves are pooled and treated as repeated cross sections over time. In order to assess whether the changes experienced by farm workers are unique, we identify a control group that has similar characteristics to the treatment group. Our econometric approach involves using two alternative specifications of a difference-in-differences model. We test whether employers reduced employment, and whether they responded at the intensive margin by reducing hours of work. The law also required non-wage benefits to be implemented, and we track the response here in the form of one such provision, namely that of a written contract. The results suggest a significant reduction in employment in Agriculture from the minimum wage, an increase in wages on average, no significant change in hours worked and a sharp rise in non-wage compliance. Acknowledgements: The research, from which this paper emanates, was funded by the International Development Research Centre (IDRC).

Keywords: Minimum Wage; Agriculture; South Africa; Wage; Employment; Hours of Work (search for similar items in EconPapers)
JEL-codes: J23 J31 J32 J38 J41 J43 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2012-07
New Economics Papers: this item is included in nep-afr, nep-lab and nep-lma
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Citations: View citations in EconPapers (13)

Published in Working Paper Series by the Development Policy Research Unit, July 2012, pages 1-20

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http://hdl.handle.net/11427/7297 First version, 2012 (application/pdf)

Related works:
Journal Article: Estimating the Impact of Minimum Wages on Employment, Wages, and Non-Wage Benefits: The Case of Agriculture in South Africa (2014)
Working Paper: Estimating the Impact of Minimum Wages on Employment, Wages and Non-Wage Benefits: The Case of Agriculture in South Africa (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ctw:wpaper:12149

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