Consultant report on effects of a minimum wage on employment and wages in Kenya - covers urban areas and rural areas cost of living, the estimation of the minimum monthly income required by urban and rural households, employment and wages trends in the private sector and the public sector, the evolution of the number of low paid workers and the estimated impact of a new minimum wage; proposes indexation systems. References, statistical tables.
David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs. A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country. With a new preface discussing new data, Myth and Measurement continues to shift the terms of the debate on the minimum wage.
Offering evidence from both detailed individual country studies and homogenized statistics across the Latin American and Caribbean region, this book examines the impact of the minimum wage on wages, employment, poverty, income distribution and government budgets in the context of a large informal sector and predominantly unskilled workforces.
In Kenya, there has been increased debate on the impact of minimum wage increases and pay disparities between sectors. Long-term differences in earnings across sectors and different regions (urban and rural) are reflected through higher poverty rates in rural areas, especially among wage earners. This study evaluates the effects of minimum wages on labor and its impact on growth. The study uses the single country static model, the PEP-1-1 model and the Social Accounting Matrix for Kenya for the year 2009. The key research questions are to assess the effects of minimum wages on rural or urban area labor markets, labor migration, and income distribution. To achieve this, the study simulates three scenarios: increases in minimum wages for formal workers in urban and rural areas at the same rate of 5%, different rates (10% rural and 5% urban), and a cut in the minimum wages in both regions. The findings indicate that increases in wage fuel the migration of labor from rural to urban areas, and stifles the expansion of the economy. A rise in minimum wages has an overall negative effect on incomes of rural households while benefiting urban households, which contributes to increased inequality. A fall in real minimum wages on the other hand, is supportive of output and employment growth.
The Clinton administration has claimed its proposal to increase the minimum wage would not affect employment; other research supports that a higher minimum wage means fewer jobs.
Study of wage policies and economic growth trends (1960s, 1970s, 1980s) in Kenya - analyses growth rate of gross domestic product, inflation, income distribution, changes in wage rate and in economic conditions, minimum wage policy, prospects, etc. Graphs, statistical tables.
