The impact of minimum wage legislation on employment in kenyan manufacturing sector 1970-2001

Abstract

The impact of minimum wages on the labor market has been a recurrent and controversial issue in the theoretical and empirical literature. Most of the studies have focused on industrialized countries and the few on developing economies are in Latin American countries. By using secondary time series data collected from various government and statistical publications, this study attempts to estimate the impact of minimum wage on employment in the Kenyan manufacturing sector for the period 1970 - 2001. The results suggest a relatively mild unemployment effects in the short-run but no significant impact in the long run. The results revealed positive employment effects of growth in national output, but a negative employment effect in the sector following increases in imports.