Productivity, non-compliance and the minimum wage


Eliane Badaoui and Frank Walsh


(forthcoming in the Journal of Development Economics and available online at:
https://www.sciencedirect.com/science/article/pii/S0304387821001383)
The paper: 
•Shows that output per worker is less than the minimum wage for many developing
country firms so that they could not comply with the minimum wage
•Develops a model rationalising why governments may implicitly tolerate non-
compliance amongst low productivity firms, where inspections of firms by labour
inspectors are instigated by worker complaints
•Documents that worker complaints are the primary instigator of minimum wage
inspections.