Extending the Coverage of Minimum Wages in India : Simulations from Household Data

In India, there is a debate about the possible extension of minimum wages to all wage-earners. Our paper provides some benchmark figures on the effects of either making the national minimum wage floor compulsory or extending the coverage of state-level minimum wages. Using the 2004-05 Employment-Unemployment Survey along with the Consumer Expenditure Survey, we estimate that the extension of minimum wages at existing levels could improve the earnings of 73 to 76 million low-paid salaried and casual workers. We also show that an extended minimum wage could substantially reduce inequality, poverty and the gender pay gap, even in the presence of some disemployment effects