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

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There is a debate in India about the possible extension of minimum wages to all wage-earners. This study 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, it estimates that the extension of minimum wages at existing levels could improve the earnings of 73 to 76 million low-paid salaried and casual workers. It also shows that if an extended minimum wage is perfectly enforced, it would substantially reduce inequality, poverty and the gender pay gap, even if there are some disemployment effects.

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