An interesting recent article by Canadian economists provides new evidence on increases in minimum wages. It suggests that for less educated workers an increase in the minimum wage results in more stable jobs, but fewer of them. In other words minimum wages makes it harder to reduce unemployment for young people and the uneducated. But those who do find a job may find that they stay longer in it. The reason may be because employers are much more careful about who they hire given the higher cost of employment. It may also be because new recruits put in a greater effort given fewer hiring opportunities. This evidence is of course relevant to Zambia given last years decision to increase minimum wages. Theres no doubt the decision has made it harder to reduce informality and tackle unemployment.
Posted on: Fri, 14 Feb 2014 07:17:40 +0000
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