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Louise Paul-Devlaux (Harvard) “Minimum Wage and Gender Gaps: Evidence from Morocco”

January 24 @ 12:15 pm - 1:30 pm

Applied Seminar 
Time: 12:15 pm – 13:30 pm
Date: 24th of January
Room : 3001


Louise Paul-Devlaux (Harvard) “Minimum Wage and Gender Gaps: Evidence from Morocco”

Abstract :This paper examines how minimum wage policies affect gender gaps in employment and wages in a setting characterized by a large informal sector and wide initial gender disparities. Focusing on the Moroccan manufacturing sector, I leverage matched formal employer-employee data to analyze the impacts of a 24% real increase in the national minimum wage between 2009 and 2015. During the period of increases to the minimum wage, the gender pay gap in the formal sector narrows by 21%. Using difference-in-differences designs, I show that this is due to increases in the minimum wage directly boosting the wages of workers initially earning below the minimum wage and to spillover effects for workers higher up in the wage distribution. Both direct and spillover effects are larger for women. Female workers who remain in formal employment are also more likely to transition to larger, higher-paying firms. However, I also document a displacement effect: the share of low-wage female workers leaving formal employment increases by 22%, while male workers remain unaffected. Firm closure, which disproportionately affects firms employing more women, explains 40% of the displacement effect. Most impacted women transition to the informal sector, where wages are substantially lower. Examining heterogeneity across local labor markets, I further show that the displacement effect is larger when women have a reduced set of formal sector outside options. Overall, even when accounting for the displacement effect, minimum wage remains an effective tool for reducing gender pay inequality.

Organizer: Pauline ROSSI