Minimum Wages in Kenya

This paper examines the performance of minimum wage legislation in Kenya, both in terms of its coverage and enforcement as well as in terms of their implications for wages and employment. Our findings based on the 1998/99 labor force data – the last labor force survey available – indicate that minimum wages, which, in principle, apply to all salaried employees, were better enforced and had stronger effects in the non-agricultural industry than in the agricultural one. More specifically, our results suggest that (i) compliance rates were higher in occupations other than agriculture, (ii) minimum wages were positively associated with wages of low-educated workers and women in non-agricultural activities, while no such relationship is found for workers in agriculture, and (iii) higher minimum wages were associated with a lower share of workers in formal activities in a given occupation and location. Our estimates indicate that a 10 percent point increase in the minimum to median wage ratio could be associated with a decline in the share of formal employment of between 1.2-5.6 percentage points and an increase of between 2.7-5.9 points in the share of self-employment.Kenya, employment, minimum wages, wage

The Economic Effects of Employment Protection: Evidence from International Industry-Level Data

This paper examines the economic effects of employment protection legislation in a sample of developed and developing countries. Implementing a difference-in-differences test lessens the potentially severe endogeneity and omitted variable problems associated with cross-country regressions. This test is based on the hypothesis that employment protection regulations are more binding in sectors of activity exposed to higher volatility in demand or supply shocks. The analysis indicates that more stringent legislation slows down job turnover by a significant amount, and that this effect is more pronounced in sectors that are intrinsically more volatile. The paper also finds that employment and value added decline in the most affected sectors, and employment and output effects are driven by a decline in the net entry of firms. In contrast, average employment per plant is not significantly affected.

Human Capital Policies: What they Can and Cannot Do for Productivity and Poverty Reduction in Latin America

Raising labor productivity is recognized as a critical factor for increasing economic growth and reducing poverty levels in Latin America. Low levels of education continue to be singled out as the main obstacle to higher productivity in the region. We examine the scope for education to lift labor incomes above poverty levels in Latin America and find that in many countries education, by itself, has a positive, but limited, potential to increase wages above a minimum level. In general, the prospects are dim because progress in raising average schooling levels has been slow even under the best historical scenarios. We also examine whether the apparent failure of education can be explained by low wage returns to schooling, and poor underlying conditions. We find that investments in education continue to have important payoffs but poor underlying conditions explain the modest prospect for the role of education in the short run. This leads us to consider what additional policies should be pursued in order to ensure higher productivity for workers in the region.

Protección del empleo y flujo bruto de puestos de trabajo: un enfoque de diferencias en diferencias

(Disponible en idioma inglés únicamente) En este trabajo se analiza el efecto de la normativa de protección del empleo sobre los flujos brutos de puestos de trabajo, en una muestra de países desarrollados y en desarrollo. Al aplicar una prueba de diferencias en diferencias, reducimos la magnitud de la pronunciada característica endógena, potencialmente grave, y omitimos problemas de variables relacionados con las regresiones de un país a otro. Esta prueba se basa en la hipótesis de que la normativa de estabilidad laboral es de naturaleza más obligatoria en algunos sectores de actividad económica que en otros, dependiendo de las características de cada sector, tales como la variación de la demanda o las sacudidas tecnológicas. A diferencia del grueso de la obra publicada, nuestro análisis indica que una normativa de estabilidad laboral más estricta desacelera los flujos brutos de puestos de trabajo, y esta tendencia es más pronunciada en sectores que requieren de una mayor flexibilidad laboral. Estos efectos ocurren dentro de la muestra de países desarrollados y en desarrollo, y son de una magnitud muy grande. Además, estos efectos son valederos independientemente de las variaciones de las medidas normativas, la cuantificación de los requisitos de flexibilidad de cada sector, las variables de control y las muestras.

Do payroll tax cuts boost formal jobs in developing countries?

Informal employment accounts for more than half of total employment in Latin America and the Caribbean, and an even higher percentage in Africa and South Asia. It is associated with lack of social insurance, low tax collection, and low productivity jobs. Lowering payroll taxes is a potential lever to increase formal employment and extend social insurance coverage among the labor force. However, the effects of tax cuts vary across countries, often resulting in large wage shifts but relatively small employment effects. Cutting payroll taxes requires levying other taxes to compensate for lost revenue, which may be difficult in developing economies

Ties That Bind: Employment Protection and Labor Market Outcomes in Latin America

This paper reviews the regulations governing hiring, firing, overtime work, social security contributions, minimum wages, and collective bargaining in the region, examining their impact on labor market outcomes.

Patrones de victimización por el hampa en América Latina

(Disponible en idioma inglés únicamente) En este trabajo se hace un perfil de las víctimas del hampa en América Latina. Se demuestra que al menos en el caso de los delitos contra la propiedad, las víctimas típicas del hampa en América Latina provienen de hogares adinerados y de clase media y que tienden a ser habitantes de las ciudades más grandes. También se demuestra que las familias que viven en ciudades que experimentan un crecimiento demográfico rápido tienen una mayor probabilidad de ser víctimas del hampa que las que viven en ciudades con una población estable. Se postulan varias explicaciones de estos hechos y aunque es prematuro presentar respuestas claras a algunas de las preguntas que se suscitan en este trabajo, al menos es posible rechazar algunas hipótesis plausibles. En general, los resultados indican que el hampa en las ciudades latinoamericanas es, en gran medida, producto de la incapacidad de muchas ciudades de la región de atender la creciente demanda de seguridad pública que generan los procesos apresurados y desorganizados de urbanización.

Part-Time Work, Gender and Job Satisfaction: Evidence from a Developing Country

This paper investigates the relationship between part-time work and job satisfaction using a recent household survey from Honduras. In contrast to previous work for developed countries, this paper does not find a preference for part-time work among women. Instead, both women and men tend to prefer full- time work, although the preference for working longer hours is stronger for men. Consistent with an interpretation of working part-time as luxury consumption, the paper finds that partnered women with children, poor women or women working in the informal sector are more likely to prefer full-time work than single women, partnered women without children, non-poor women or women working in the formal sector. These results have important implications for the design of family and child care policies in low-income countries.job satisfaction, gender, part-time work, job flexibility