ESR 10 The effects of governmentally enforced minimum wages on formal sector employment
Early Stage Researcher: Akua Afaribea Martinson
Research Directors: Prof. Dr. Wilhelm Löwenstein (Institute of Development Research and Development Policy, Ruhr-University Bochum (RUB), Germany),
Prof. Dr. Rémi Bazillier (Centre d’Economie de la Sorbonne, University Paris 1 Panthéon Sorbonne, UP1, Centre National de Recherche Scientifique, France)
Based on the growth model for partially formalised economies, the PhD project will model and empirically test the transmission channels between minimum wages and formal sector job creation/employment and between formal sector job creation, economic growth and poverty reduction. Empirical testing will be based on panel data from SSA countries as well as on a case study from Ethiopia using time series. In the context of the case study, the PhD project will in addition carry out a labour survey to determine the employment status of the surveyed workers, distinguishing between employment in the formal sector and in the shadow economy, and informal employment.
Size and direction of the effects of implementing minimum wages on employed formal sector labourers and on formal sector employment creation are estimated. The ambiguous poverty impacts of such type of labour market regulation are identified. Based on survey data from Ethiopia, a typology on the employment status of workers is applied, which shows the different employment realities in the formal, the shadow and the informal economy.
The project involves a strong collaboration between the Institute of Development Research and Development Policy at RUB and the Centre National de Recherche Scientifique/ Centre d’Economie de la Sorbonne at UP1 and includes mandatory research stays of the ESR in Paris for six months in total.
Further secondments are planned at Deutsche Investitions- und Entwicklungs GmbH (DEG) in Cologne, Germany (3 months) and as field research period (3 months) supervised by Bahir Dar University (Ethiopia).