Abstract
There is considerable debate on the level and effects of minimum wages for many decades. However, most of the studies are conducted in developed countries. This chapter first reviews the theoretical frameworks of anticipated effects of a minimum wage increase on wages and employment in develo** countries. The empirical challenges are then discussed, including potential heterogeneity, simultaneity (or endogeneity) between employment and minimum wages, and possible omitted variable bias, taking into consideration of the different labor market structures and labor market institutions in develo** countries, particularly the level of informal sector, extent of binding minimum wages, level of enforcement, and vulnerability of the workers impacted. Evidence from BRICS (Brazil, Russia, India, China, and South Africa) members are reviewed and discussed. Surprisingly, there is substantial evidence of positive wage effects in both formal and informal sectors, although the adverse effects on employment are generally modest in the formal sector and almost non-existent in the informal sector. However, when minimum wages are binding and enforced, studies focusing on vulnerable workers do find significant and positive wage effects and strong disemployment effects, implying that classic trade-off of minimum wages between higher wages and lower employment does occur in develo** countries.
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Acknowledgments
Responsible Section Editor: Professor Dr. Klaus F. Zimmermann
The chapter has benefitted from valuable comments of the editors and anonymous referees. Financial support by the Stephen Jarislowsky Foundation and Social Sciences and Humanities Research Council of Canada is gratefully acknowledged. There is no conflict of interest.
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Fang, T., Ha, V.H. (2023). Minimum Wages in Develo** Countries. In: Zimmermann, K.F. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_375-1
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