A NOTE ON MEASURING THE DEPTH OF MINIMUM WAGE VIOLATION
Bhorat, Haroon; Kanbur, Ravi; Mayet, Natasha
In the empirical literature on minimum wage enforcement, the standard approach is to measure the number of violations, not their depth. In this paper we present a family of violation indices which, by analogy with poverty indices, can emphasize the depth of violation to different degrees. The standard measure is a special case of this family of indices, but other members of the family highlight the depth of violation. We present an application to South Africa to show that the depth of violation matters, and is not captured by the standard measure in actual situations.
WP 2011-03 January 2011JEL Classification Codes: J38; O55
Charles H. Dyson School of Applied Economics and Management, Cornell University