Is minimum wage an effective tool to promote decent work and reduce poverty? The experience of selected developing countries (2001), by C. Saget
This paper presents a survey of the effects of minimum wage legislation on the level of employment and poverty in selected developing countries. Following the introduction, the second section provides a literature survey of the relationship between the level of minimum wage and employment and between the level of minimum wage and poverty. The third section consists of an overview of low-wage labour markets and presents trends in employment, average wages and minimum wages. Such markets show evidence of a high instability of the minimum wage in many developing countries, both in real terms and with respect to the average wage. The fourth section is empirical and tests the response of employment and poverty to changes in the minimum wage using time series data in more than 20 countries.

The data analysis gives strong support to the proposition that the minimum wage may bring positive results in poverty alleviation by improving the living conditions of workers and their families while having no negative results on employment. There is no evidence of the effect of the size of the minimum relative to the average wage on the size of the informal economy in Latin America.

The paper concludes with some specific economic and social policy recommendations resulting from the analysis.