@workingpaper{Asongu2014bz,
title = {A Theory of Compliance with Minimum Wage Law},
author = {Mohamed Jellal Simplice A. Asongu},
editor = {African 2014 Governance and Development Institute WP/14/008},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/A-Theory-of-Compliance-With-Minimum-Wage-Law.pdf},
year = {2014},
date = {2014-01-01},
abstract = {Purpose – In this paper, we introduce firm heterogeneity in the context of a model of noncompliance
with minimum wage legislation.
Design/methodology/approach – Theoretical modeling under government compliance policy
and wages & employment under non compliance.
Findings – The introduction of heterogeneity in the ease with which firms can be monitored
for non compliance allows us to show that non-compliance will persist in sectors which are
relatively difficult to monitor, despite the government implementing non stochastic
monitoring. Moreover, we show that the incentive not to comply is an increasing function of
the level of the minimum wage and increasing function of the gap between the minimum
wage and the competitive wage rate.
Originality/value – We have shown why non compliance persists in certain sectors of
activity despite frequent inspection by government agencies.},
keywords = {Minimum wage legislation; informal sector in LDCs.},
pubstate = {published},
tppubtype = {workingpaper}
}