Other

Econ3x3

University of Cape Town

What happens when a previously unregulated labour market is regulated? After the introduction of minimum wages and mandatory employment contracts for domestic workers, wages increased markedly while neither employment nor hours worked declined; some formalisation of working conditions also occurred. All these occurred despite a lack of monitoring and enforcement, suggesting that such actions (often costly) are not essential for regulation to have a significant impact on informal employment conditions, at least in the short run.

This was released as an Econ3x3 Brief in April 2014. It is available here: http://www.econ3x3.org/article/enforcement-and-compliance-case-minimum-wages-and-mandatory-contracts-domestic-workers.