This paper investigates the effects of minimum wage policies on employment rates in developing economies. Utilizing a panel data set from 20 developing countries over the period from 2000 to 2020, we employ a difference-in-differences approach to assess the impact of minimum wage increases on employment levels across various sectors. Our findings suggest that while minimum wage hikes can lead to short-term employment reductions in the formal sector, the long-term effects are mitigated by increased productivity and consumer demand.
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