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# Endnotes

1. The literature that examines empirical links between policies and growth is vast, yet inconclusive. Some studies have found that the government spending/GDP or the rate of growth of government spending are negatively correlated with economic growth (rate of growth of GDP). One empirical study of thirtyone countries found that labor market distortions -- defrned in part through evidence of government interventions in labor markets -- accounted for about 10 percent of the variation in economic growth (Agarwala 1983:27). Other studies have found no correlation (World Bank 1988:51-52). A recent methodological study questions the robustness of the relationship between policy variables and economic growth and finds the correlation of alI policy variables (except investment/GDP) with growth to be fragile. The authors hypothesize that no single policy -- including government size -- is demonstrably detrimental or crucial to growth (Levine and Renelt 1990).

2. There is no consensus however in the industrial country (largely U.S.) literature about whether a minimum wage has a measurable negative impact on employment in general, or on specific groups like young people.

3. See Adams and others (1991) for a summary of the literature.

4. See Riveros (1991) for a review of the literature on wage indexation in developing countries.

5. Although the discussion is couched in terms of wages, the relevant variable is the real cost of labor, which may or may not move in the same direction as the real wage. See below for a review of the literature on whether public sector wages are an acceptable proxy for total labor cost.

6. Indeed, Gelier (1991:187) argues that labor market deregulation in Latin America is aimed not only at generating employment, but at normalizing the illegal flexibility that already exists.

7. All data from Heller and Tait (1984) refer to the years 1979-81. Although the numbers for individual countries may have changed, there has been no comprehensive update, and it is safe to say that broad comparisons remain accurate.

8. The countries are Ethiopia, Kenya, Morocco, Nigeria, Sierra Leone, Togo, and Tunisia. Wage bill growth ranged from 1.1 percent (Nigeria, 1980-85) to 322.7 percent (Kenya, 1980-87).

9. Structural changes included laying off unskilled workers at lower grades and moving employees up job ladders to compensate for increased responsibilities as unskilled workers were laid off. Salary inflation can also compensate for falling real wages. Only in Nigeria does it appear that salary increases and upgrading offset the effects of retrenchment, leading to a very modest increase in the wage bill. Chew (1990) also presents evidence of compensatory upgrading in Uganda.

10. See van der Gaag, Stelcner, and Vijverberg (1989) for a synopsis of recent empirical studies.

11. The formal sector includes nonfinancial public enterprises, state and local government, anJ the private **sector.** 12. See for example, Colclough (1991); World Bank (1991); Chew (1990); Robinson (1990); ILO (1990); van Ginnekin (1990); Nunberg and NeUlis (1990); Lindauer, Meesook and Suebsaeng (1988); Nunberg (1988); Schiller (1988); Murshid and Sobhan (1987); Irfan and Ahmed (1985); and Heller and Tait (1984).

13. Public firms are defined as at least 50 percent publicly owned. n - + 10,600 workers.