Most economists agree with the proposition that a minimum wage set above the market clearing equilibrium wage will cause unemployment. What happens when a minimum wage is set below the equilibrium wage is, however less clear. This is partly because the literature shows that the effect of a minimum wage will depend on the reason for its implementation. The literature also shows that the effect of a minimum wage depends on a range of macro level considerations. In this paper the international literature on the effects of a minimum wages is reviewed, and lessons are drawn for the implementation of a minimum wage in South African agriculture.


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