The Effect of Minimum Wages on the Employment and Earnings of South Africa’s Domestic Service Workers
Upjohn Institute Working Paper 05-120
Tom Hertz
American University
hertz@american.edu
August 2005
JEL Classification Codes: H3, I31, J31
Abstract
Minimum wages have been in place for South Africa’s one million domestic
service workers since November of 2002. Using data from seven waves of the
Labour Force Survey, this paper documents that the real wages, average monthly
earnings, and total earnings of all employed domestic workers have risen since the
regulations came into effect, while hours of work per week and employment have
fallen. Each of these outcomes can be linked econometrically to the arrival of the
minimum wage regulations. The overall estimated elasticities suggest that the
regulations should have reduced poverty somewhat for domestic workers,
although this last conclusion is the least robust.
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