strategic amnesty and credible immigration reform why do countries that impose employer sanctions to deter the illegal entry of foreign workers nevertheless grant amnesty to illegal immigrants in this article i provide a positive theory of amnesty provision in a model where the constrained optimal immigration reform involving the joint use of employer sanctions and border interdictions is time inconsistent in particular my framework demonstrates that host countries of immigration can enhance the credibility of their immigration reforms by binding their own hands and strategically granting a socially excessive amount of amnesty to illegal workers

minimum wages for domestic workers impact evaluation of the indian experience abstract what impact does minimum wage legislation have on wages and employment opportunities in an informal sector in a developing country the paper answers this question in the context of minimum wage legislation for domestic workers in india over the period of 2004 2012 combining matching procedure with difference in difference estimation approach supported by extensive robustness checks the paper estimates both the short run and the long run impact of the legislation on real wages and employment results show a positive impact of the legislation on real wages in the shortrun while there is limited evidence of this effect persisting in the long run further the legislation did not seem to have any impact at the extensive margin on the probability of being employed as a domestic worker over short or long run our analysis further reveals that the wages of majority of workers remain below the minimum wage available evidence from the ground in line with theoretical predictions point towards weak enforcement of the legislation as the potential driving factor of observed results as india recently extended national level minimum wage for all workers the paper provides a cautionary tale on the potential pitfalls of implementation of this legislation in informal sector and suggests some ways to overcome the same

the expected penalty for committing a crime several papers have noted and sought to explain the paradox of minimum wage law compliance compliance rates are high even though the penalty for violating the law is allegedly less than the underpayment to workers by comparison we show that the actual penalty exceeds the underpayment we combine our estimates of the costs of violating the law with estimates of the probability of apprehension to arrive at the expected cost of violating the law in contrast with previous work we find that the expected costs are sufficiently high to make compliance rational

the minimum wage in formal and informal sectors evidence from an inflation shock abstract i estimate the effect of the minimum wage on formal wages informal wages and employment in colombia i exploit an unexpected increase in the real minimum wage during 1999 my analysis combines unconditional quantile regressions with a differences in differences design i find evidence of wage responses for wages close to the minimum wage the increases are present in both the informal and formal sectors and are larger in the formal one wages around the minimum increase by around 3 percent in the formal sector for a 10 percentage points larger minimum wage incidence and by around 1 percent in the informal sector these increases are smaller than those implied by full compliance to minimum wage policy but positive for some unaffected workers this suggests employers partially comply with the minimum wage and use it as a reference i find slight negative employment effects on the informal sector but not on the formal sector the effects in the informal sector are not driven by cross sectoral effects the results suggest the minimum wage has a direct impact on the informal labor market although they may not apply to minimum wage changes in other countries or contexts or to larger minimum wage increases

the minimum wage as a redistributive tool most analyses of the minimum wage focus on its unintended employment consequences the goal of a minimum wage is not of course to reduce employment but to redistribute earnings to low paid workers under what conditions can a minimum accomplish this are those conditions met in economies which otherwise rely extensively on markets to set wages such as the united states which in i994 rejected mandating health benefits that would have effectively raised the minimum or the united kingdom where in i995 the labour party promised a national minimum upon election who pays for the redistribution who benefits the redistributive effects of a minimum wage depend on the labour market and redistributive system in which it operates on the level of the minimum and on its enforcement at best an effective minimum wage will shift the earnings distribution in favour of the low paid and buttress the bottom tiers of the distribution from erosion at worst minimum wages reduce the share of earnings going to the low paid by displacing many from employment neither outcome is certain so that enacting a minimum is a risky but potentially profitable investment in redistribution it is the balancing of risk against gain that makes a minimum so controversial until the i980s i99os competitive labour markets in the united states and united kingdom produced rising real earnings for the low paid and falling earnings inequality so the risk of enacting a national minimum united kingdom or of raising substantially the national minimum united states seemed unnecessary why interfere with the competitive market when it produces socially desirable trends in earnings albeit a bit slower than one might accomplish with a legislated minimum two decades of falling real wages for lower decile workers in the united states and of rising earnings inequality in the united kingdom1 have however put the minimum back in play the job market is not doing much for lower paid workers in the united kingdom virtually all social groups accept the need for some redistribution though they differ on the best way to accomplish such in the united states pressures for tax cuts can be interpreted as a way for employees to gain real wage increases unavailable through the market the consensus favouring redistribution through the earned income tax credit disappeared in the midi 990s rush to reduce federal budget deficits this paper takes as its operating premise the goal of redistributing earnings

minimum wages and compliance the case of trinidad and tobago explores compliance to the national minimum wage in trinidad and tobago potential costs associated with the national minimum wage actual incidence of compliance in terms of employment and wage distribution nature of labor market this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from an this abstract was borrowed from another version of this item

on compliance with the minimum wage law economic analyses of the effects of minimum wage laws usually assume implicitly that employers fully comply with such laws however in a recent article in this journal ashenfelter and smith 1979 hereafter as have shown that this is not the case using data collected from employees as estimate that for the united states in 1973 only 64 percent of the workers who would otherwise have earned less than the federal minimum wage actually received the minimum wage similar data collected from employers indicated a compliance rate of 77 percent the magnitude of these numbers clearly indicates the need for a better understanding of the factors influencing noncompliance with the federal minimum wage law ashenfelter and smith present a model which explains employers compliance behavior they conclude that the incentive to comply is lower a the lower is the market wage below the minimum wage and b the larger is the elasticity of demand for labor in absolute value p 336 they also argue that the requirement that a violating employer merely pay to employees a fraction of the difference between the minimum and the actual wage received does not constitute a penalty for noncompliance at all p 337 however by assuming that the amount of the penalty that employers pay if they do not comply is exogenously given as do not consider the employment effects of the minimum wage that is that noncomplying employers will have hired in general more workers than they would have if they had complied consequently the requirement that a noncomplying employer pay a fraction of the difference between the two wages to his employees constitutes a real penalty this note presents an alternative formulation of the model proposed by as which accounts for the fact that the penalty that the

a theory of employment guarantees contestability credibility and distributional concerns abstract both raw intuition and past experience suggest that the success of an employment guarantee scheme egs in safeguarding the welfare of the poor depends both on the wage it promises and the ease with which any worker can gain access an egs is thus at once a wage guarantee and a rationing device we chart the positive and normative limits of such an egs as an efficiency improving and poverty alleviating policy reform in a canonical labor market setting at its core an egs provides an aggregate not just egs employment target given the target the egs wage and access can be fine tuned to deliver outcomes ranging from a contestable labor market to a simple universal unemployment benefit the credibility of any such target however is shown to be triggered endogenously by a host of factors the distributional concerns of the planner private sector productivity the prevalence of market power and the need for public works paradoxically the outcome with a planner who cares only about efficiency can be less efficient than the outcome with a planner whose social welfare function also gives weight to poverty

where the minimum wage bites hard introduction of minimum wages to a low wage sector between 1993 and april 1999 there was no minimum wage in the united kingdom except in agriculture in this paper we study the effects of the introduction of a national minimum wage nmw in april 1999 on one heavily affected sector the residential care homes industry this sector contains a large number of low paid workers and as such can be viewed as being very vulnerable to minimum wage legislation we look at the impact on both wages and employment our results suggest that the minimum wage raised the wages of a large number of care home workers causing a very big wage compression of the lower end of the wage distribution thereby strongly reducing wage inequality there is some evidence of employment and hours reductions after the minimum wage introduction though the estimated effects are not that sizable given how heavily the wage structure was affected

the impact of minimum wages in mexico and colombia there are diverging views about how minimum wages affect labor markets in developing countries advocates of minimum wages hold that they redistribute resources in a welfare enhancing way and can thus reduce poverty improve productivity and foster growth opponents on the other hand contend that minimum wage interventions result in a misallocation of labor and lead to depressed wages in the very sectors the rural and informal urban sectors where most of the poor are found with the effect of wasting resources and reducing the growth rate data from colombia and mexico for the 1980s provide an opportunity to evaluate the impact of minimum wages in mexico in the 1980s the minimum wage fell in real terms roughly 45 percent by 1990 mexico s minimum wage was about 13 percent of the average unskilled manufacturing wage during the same period the minimum wage in colombia increased at nearly the same rate reaching roughly 53 percent of the average unskilled wage the author charts how the mandated minimum wage affected the demand for skilled and unskilled labor in both countries during that decade findings are as follows in mexico minimum wages have had virtually no effect on wages or employment in the formal sector the main reason the minimum wage is not an effective wage for most firms or workers in the informal sector in turn there is considerable noncompliance with the mandated minimum wage especially among part time and female workers as a result significant numbers of workers are paid at or below minimum wages in colombia minimum wages have a much stronger impact on wages judging from their proximity to the average wage and both cross section and time series estimates the estimates imply that the elasticity of low paid unskilled employment with respect to minimum wages is in the range of 2 to 12 percent

the family gap and family friendly policies the case of norway norway has among the most generous family policies in the world the most recent is the cash for care reform which was implemented in 1998 we answer two main questions in this article what is the level of the family gap in such a generous regime and how has it developed as a consequence of the latest reform results suggest that the family gap is rather modest in norway compared to many other countries and we find no evidence of a worsening of the gap in recent years a positive interpretation of these results is that the norwegian labour market is fairly flexible in the sense that it seems to be able to absorb even more generous family policies

turning a blind eye costly enforcement credible commitment and minimum wage laws in many countries non compliance with minimum wage legislation is widespread and authorities may be seen as having turned a blind eye to a legislation that they have themselves passed but if enforcement is imperfect how effective can a minimum wage be and if non compliance is widespread why not revise the minimum wage this paper examines a minimum wage policy in a model with imperfect competition imperfect enforcement and imperfect commitment and argues that it is the combination of all three that produces results which are consistent with a wide range of stylized facts that would otherwise be difficult to explain within a single framework we demonstrate that turning a blind eye can indeed be an equilibrium phenomenon with rational expectations subject to an ex post credibility constraint since credible enforcement requires in effect a credible promise to execute ex post a costly transfer of income from employers to workers a government with an objective function giving full weight to efficiency but none to distribution is shown paradoxically to be unable to credibly elicit efficiency improvements via a minimum wage reform

compliance and enforcement decisions under the national labor relations act this article analyzes the growth of regulatory litigation under the national labor relations act by modeling the compliance and enforcement decisions made by the employers unions and workers covered by the act an empirical analysis of the model on time series data for 1950 80 confirms the importance of compliance and enforcement incentives in explaining the growth of unfair labor practice charges while some actions of the national labor relations board the regulatory agency established by the act influence these incentives and the resulting regulatory litigation changes in some important incentives notably relative labor costs are beyond the board s influence

the impact of labor market regulations the authors investigate the impact of labor market regulations in settings where compliance is incomplete they review some stylized facts about labor market behavior present an analytical model that may explain such behavior and provide a checklist for assessing the distortionary impact of a regulation such as the minimum wage they take as their starting point the limited evidence about the distortionary effects of such regulations and argue that there may be natural limits on the efficiency losses engendered by labor market regulations first the regulations may not be binding at market equilibrium for example minimum wages may be set so low that they are ineffective second even if they are binding the relevant elasticities of supply and demand may be so low that the regulations have little impact on efficiency third even if the regulations are binding and elasticities are sizable compliance may be low the authors argue that the likelihood of compliance will be greatest when the regulations are binding and the relevant elasticities are sizable that is if the distortionary costs of regulations are not rendered insignificant by the first two reasons then the returns to noncompliance will be high and other things being equal employers will evade or avoid the regulations thereby minimizing the imact on efficiency the argument rests on profit maximization subject to a hard budget constraint public enterprises which are not concerned only with profit maximization and often have softer budget constraints than the private sector may be more willing to conform to profit reducing regulations but in this case the authors argue that compliance may reduce already existing efficiency losses

contractual dualism market power and informality we develop a search theoretic model of contractual dualism in formal and informal labour markets the model i provides the micro underpinnings for endogenous determination of employer market power in the formal and informal sectors ii offers a unified and coherent set up whereby a host of salient features of developing country labour markets can be explained together and iii places for the first time the stiglerian prescription of the optimal unemployment minimising minimum wage in the broader context of labour markets where formal job creation is costly where employer market power is endogenous and where formal employment informal employment and unemployment coexist

impact of labor market regulations this article investigates the impact of labor market regulations in a setting with incomplete compliance it takes as its starting point the limited evidence regarding the distortionary costs of labor market regulations and argues that there may exist natural limits to the efficiency losses engendered by such regulations the article reviews some stylized facts regarding labor market behavior presents an analytical model that may explain such behavior and provides a checklist for assessing the distortionary impact of regulations such as minimum wages

oligopsony and monopsonistic competition in labor markets we argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets using a simple model with job differentiation and preference heterogeneity we illustrate how such models can be employed to explain the existence of wage dispersion the persistence of labor market discrimination market failures in the provision of training and the anomalous employment effects of minimum wages

trade and labour standards will there be a race to the bottom the objective of this paper is to investigate whether international rivalry will lead to a race to the bottom rtb in labour standards we derive the equilibrium levels of labour standards in an environment that is most conducive to a rtb specifically the brander and spencer 1985 model of strategic trade in which each government has an incentive to lower the cost of a domestic firm our analysis suggests that strategic trade considerations do not lead to a rtb in labour standards to the contrary equilibrium labour standards are higher than those in the absence of government intervention in the case where governments are free to choose the rate of an export subsidy labour standards are inefficiently high binding global trade rules that reduce the subsidy rate would move the equilibrium labour standards closer to their efficient level and a prohibition of the subsidy would eliminate the efficiency loss in labour markets

minimum wages for ronald mcdonald monopsonies a theory of monopsonistic competition recent empirical work on the effects of minimum wages has called into question the conventional wisdom that minimum wages invariably reduce employment we develop a model of monopsonistic competition with free entry to analyse the effects of minimum wages and our predictions fit the empirical results closely under monopsonistic competition we find that a rise in the minimum wage raises employment per firm causes firm exit and may increase or reduce industry employment minimum wages increase welfare if they raise industry employment but welfare effects are ambiguous if employment falls

on the economics of compliance with the minimum wage law this paper reexamines the issues of compliance with and enforcement of the minimum wage law recently addressed in this journal by ashenfelter and smith and by grenier pursuing a more rigorous methodology we are able to add new general conclusions and correct and reconcile some previous conflicting conclusions concerning the role of the disparity between the minimum and free market wages the level and elasticity of labor demand and the magnitude of deterring monetary sanctions on the noncompliance decision our formulation also addresses the law evasion reduced wages as well as the law avoidance modified employment aspects of the noncompliance decision which previous formulations have ignored

the perverse effects of wage and price controls in search markets abstract this paper examines the effects of price ceilings and minimum wages on the performance of markets in which agents must invest in costly search to become informed about prices or wages in this context it is found that the market equilibrium may respond to changes in policy instruments in strikingly counterintuitive ways in particular the imposition of price ceilings and minimum wages may respectively result in consumer price increases and wage decreases thus an important implication of our analysis is that when unions fight to increase wages by raising the minimum wage they may paradoxically actually be reducing the average wage of its members

minimum wage noncompliance and the employment decision the employment effects of minimum wage noncompliance have been the focus of several theoretical contributions to the minimum wage literature the dominating conclusion being that the noncomplying employer while reducing employment below the free market level will still employ more labor than he would if complying allowing however for partial compliance this study applies a portfolio choice approach to the employer s problem concluding surprisingly that the minimum wage law may give rise to a full compliance employment effect even if it is partially evaded this result is further shown to hold with regard to labor market laws in general

theory and evidence on the political economy of the minimum wage this paper examines how closely the minimum wage has been set to the most popularly stated goals of minimun wage policy i first estimate these goals the minimum wage rate at which the relevant labor demand is unitary elastic maximizing the total earnings of minimum wage workers about 5 35 and the level that would lift a typical minimum wage worker s family out of poverty about 5 17 i can reject that the actual minimum wage policy has been driven by desire to achieve these goals and find that a simple interest group model best explains the historical path of the minimum wage rate

the nature of minimum wages and their effectiveness as a wage floor in costa rica 1976 1991 abstract this study describes costa rica s complex minimum wage system and its evolution over 1976 1991 examines the trend in minimum wage to average wage in eight industries and compares the number and characteristics of workers who earn below the minimum wage over these 16 years in the covered and uncovered sectors we conclude that noncompliance is a major problem on average one third of the workers in the legally covered sector earn below the minimum wage over this period moreover the same proportion earns below the minimum wage in the uncovered sectors this evidence indicates that the law may fail its intent of assuring an adequate salary to workers without bargaining power

utilizing conjoint analysis to design modern crop varieties empirical example for groundnut in niger abstract preferences for monetary and non monetary plant traits influence modern crop variety adoption decisions of farmers to enhance adoption probability of modern crop varieties it is necessary to identify and focus research on traits that significantly contribute to utility while de emphasizing insignificant plant attributes this paper illustrates the potential for applying conjoint analysis to aid the design and targeting of client responsive modern crop varieties farmers ranked eight orthogonally derived plant trait combinations used in an illustrative example utilities were estimated using the choice probability based method of ordered probit results showed that conjoint analysis can differentiate significant and non significant traits of modern crop varieties the usefulness of applying conjoint analysis over identifiable disaggregated groups of a sample was also evident future application of conjoint analysis to the design and targeting of modern crop varieties should carefully consider sample composition and size to permit the estimation of relevant sub models for desired farmer segments

the consequences of increased enforcement of legal minimum wages in a developing country an evaluation of the impact of the campana nacional de salarios minimos in costa rica in august 2010 the costa rican government implemented a comprehensive program to increase compliance with legal minimum wages the campana nacional de salarios minimos national campaign for minimum wages to evaluate the impact of the campaign the authors use a regression discontinuity rd approach which compares what happened to workers who before the campaign had been earning below the minimum wage to those who before the campaign had been earning above the minimum wage they analyze a panel data set with information on workers from before the campaign began july 2010 and after the campaign had been in operation for some time july 2011 the evidence supports the conclusion that the campaign led to an increase in compliance with minimum wage laws in costa rica the mean earnings of those being paid less than the minimum wage in 2010 increased by approximately 10 more than the earnings of those being paid more than the minimum wage the campaign led to the largest increases in the wages of wome

a pareto improving minimum wage this paper shows that a graduated minimum wage in contrast to a constant minimum wage can provide a strict pareto improvement over what can be achieved with an optimal income tax the reason is that a graduated minimum wage requires high productivity workers to work more to earn the same income as low productivity workers which makes it more difficult for the former to mimic the latter in effect a graduated minimum wage allows the low productivity workers to benefit from second degree price discrimination which increases their income

minimum wage effects under endogenous compliance evidence from peru latin american labor markets feature large informal sectors in practice however the simple duality formal informal has many different shades firms tend to comply more with certain legislation than with other recent evidence has suggested that minimum wages have significant effects on the informal sector bell 1997 for mexico gindling and terrell 2004 for costa rica lemos 2004 and fajnzylver 2001 for brazil and maloney and nunez 2004 for colombia further some of this evidence suggests effects throughout a large part of the wage distribution this has been interpreted as evidence of lighthouse or numeraire effects we test this hypothesis using panel data from peru to identify effects throughout the wage distribution although there are some effects on informal sector workers overall results provide little support for numeraire or lighthouse effects labor monthly earnings are affected only at the bottom of the distribution 0 25 0 60 of the minimum wage made up mostly of informal workers and for formal workers earning between the old the new minima negative effects on the probability of retaining employed status after a minimum wage shock are either weak or non significant for wage earners below the minimum wage but significant for formal workers trapped between minima and for both formal and informal earning between 1 2 and 2 times the minimum wage independent workers earning below minimum suffer negative effects on both earnings and employment

evidence on the impact of minimum wage laws in an informal sector domestic workers in south africa what happens when a previously uncovered labor market is regulated we exploit the introduction of a minimum wage in south africa and variation in the intensity of this law to identify increases in wages for domestic workers and no statistically significant effects on employment on the intensive or extensive margins these large partial responses to the law are somewhat surprising given the lack of monitoring and enforcement in this informal sector we interpret these changes as evidence that strong external sanctions are not necessary for new labor legislation to have a significant impact on informal sectors of developing countries at least in the short run