Minimum wages and poverty: A cross-country analysis

Abstract

The concept of poverty is usually explained in terms of financial resources; however, it may also include deprivation in non-economic dimensions, such as education, health, and standard of living. These three dimensions of poverty or well-being have lacked attention from researchers in the past. At the start of the twentieth century, researchers explored whether non-economic poverty also drives people towards a lower quality of life and decreased well-being. In this regard, one of the popular instruments that can help to alleviate non-economic poverty is the minimum wage policy. It helps workers to maintain a stable standard of living required to avoid poverty. The prime objective of this research is to assess the importance of minimum wages in reducing social poverty in 11 selected Asian countries (Bangladesh, China, India, Iran, Indonesia, Japan, Korea, Nepal, Pakistan, the Philippines, and Thailand). This study used data ranging from 2000 to 2017. Using the ordinary least squares (OLS) estimation method, the results suggest that the minimum wage policy alone is not helpful unless supplementary policies are implemented to reduce non-economic poverty.