Enforcement and compliance: the case of minimum wages and mandatory contracts for domestic workers
reads 16,712Taryn Dinkelman, Vimal Ranchhod, Clare Hofmeyr on 14 April 2014
What happens when a previously unregulated labour market is regulated? After the introduction of minimum wages and mandatory employment contracts for domestic workers, wages increased markedly while neither employment nor hours worked declined; some formalisation of working conditions also occurred. All these occurred despite a lack of monitoring and enforcement, suggesting that such actions (often costly) are not essential for regulation to have a significant impact on informal employment conditions, at least in the short run.