Minimum wages and youth: The case of South Africa

Type Journal Article - Journal of African Economies
Title Minimum wages and youth: The case of South Africa
Volume 25
Publication (Day/Month/Year) 2016
Page numbers i61-i102
This article applies the econometric methods of the new minimum wage literature to
assess the impact of minimum wages on employment, wages and non-wage benefits
for youth in South Africa. We find a statistically significant but small decline in youth
employment in Agriculture. In addition, a small but significant increase in youth
employed in Retail and the Taxi sector is observed. For the other sectors, we find no
effect. There is a positive wage effect for young people in four of the six minimum
wage sectors in our preferred estimation. At the intensive margin, hours of work
were adjusted downward in three of the six minimum wage sectors and increased
in the post-law period for one sector. It is only in one sector, Retail, where the law
appears to have increased the probability of having a written employment contract.
In addition, we measure minimum wage violation and find significant levels of noncompliance
with the law for a large cohort of young people in South Africa.

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