Minimum wages and poverty in a developing country: Simulations from Indonesia's household survey

Chris Manning, Kelly Bird

    Research output: Contribution to journalArticle

    Abstract

    This study focuses on minimum wages, income distribution, and poverty, taking Indonesia as a case study. A simulation approach assesses who benefits and who pays for minimum wage increases. Among the poor, a minimum wages increase boosts net incomes for 21% of the households, while it results in net losses to 79% of the households. The impact is slightly less severe when there are job losses. Although minimum wage increases are mildly progressive (the non-poor pay a higher share of the costs), they are unlikely to be an effective antipoverty instrument in developing countries like Indonesia.
    Original languageEnglish
    Pages (from-to)916-933
    JournalWorld Development
    Volume36
    Issue number5
    DOIs
    Publication statusPublished - 2008

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