Minimum wage and employment: a gender perspective for Mauritius

Varuna Dreepaul-Dabee,Verena Tandrayen-Ragoobur

doi:10.1108/jbsed-10-2021-0134

Varuna Dreepaul-Dabee, Verena Tandrayen-Ragoobur

Open Access

https://doi.org/10.1108/jbsed-10-2021-0134

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Abstract

PurposeThis paper aims to examine the employment effect of the minimum wage in Mauritius, a country that has recently introduced an economy-wide national minimum wage. As women have low labor force participation rate and higher unemployment rate compared to men, this study sheds light on the impact of the national minimum wage on male and female employment.Design/methodology/approachA conceptual framework based on the labor–leisure model of Blundell et al. (2007) incorporating the minimum wage as an important variable influencing the employment decision of the individual serves as the methodological backdrop of this paper. It applies the difference-in-difference estimation technique and uses micro data from the Continuous Multi-Purpose Household Survey for the period 2017–2019.FindingsThe results show that minimum wage has a significant negative impact on overall employment. With the imposition of the national minimum wage, the probability that an individual, currently earning less than the minimum wage, remains employed is 0.525 lower than that of a worker earning above the minimum wage level. Moreover, using sex-disaggregated data, the analysis demonstrates the negative employment effects of the minimum wage adversely impact women more than men.Originality/valueThis is a first attempt to estimate the effect of the newly introduced national minimum wage on employment in Mauritius. While the effects of a minimum wage vary across different segments of the economy, this study adopts a gender perspective by comparing the impact of the minimum wage on male and female employment.

Highlights

Globalization has profound effects on the labor market in terms of expanding job opportunities as well as boosting real wages
Minimum wage Set of control variables comprising of Continuous variable and refers to number of years of the individual Reflects experience and shows relationship between age and wage Indicates whether the worker is married, single or one parent Denotes gender of the individual and takes the value of 1 if the worker is male and 0 if female Captures the actual years of schooling, which pertains to whether the individual has primary education or primary and secondary education, or primary, secondary and tertiary education
Conclusion and policy recommendations As the Mauritian government opted to introduce a minimum wage, it presented an excellent opportunity to analyze its effect on employment from a gender perspective in a resource-poor economy dependent on its human capital for its economic prosperity

Summary

Introduction

Globalization has profound effects on the labor market in terms of expanding job opportunities as well as boosting real wages. While many developed countries have reaped the benefits of global integration, developing countries are still struggling to improve their labor market conditions and reduce poverty. In view of reducing wage inequality and improve livelihoods of workers, many developing economies are introducing or increasing their national minimum wage, which aims to protect workers at the lowest end of the wage spectrum, who are either less educated or low skilled or both. The standard neoclassical theory predicts that under perfect competition, an increase in minimum wage above market clearing rates will lead to unemployment (Zucker, 1973; Carter, 1978; Clemens and Wither, 2019; Kawaguchi and Mori, 2021).

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