Impact of the 2008 Minimum Wage Review on Labor Supply in Cameroon

This paper investigates the implications of the 2008 minimum wage review for labor supply using the 2005 and 2010 Cameroon labor force surveys. Specifically, it assesses the extent, depth, and severity of minimum wage violations in the Cameroon labor market, and evaluates the impact of the 2008 minimum wage review on labor supply in Cameroon between 2005 and 2010. To achieve these objectives, use is made of the violation class of indices, bivariate probit, and the control function. Empirical results show that minimum wage violation is more prevalent, deeper, and severer among rural (female) workers than their urban (male) counterparts. Results also confirm a direct relationship between engaging in the formal sector and labor supply over the period 2005–2010 and participating in the formal sectoincreasesse the hours of work. These findings are in tandem with the wisdom that the Cameroon government could adopt a compliance-enhancing strategy that needs to be comprehensive, addressing issues throughout the design, adjusting, and implementing the minimum wage policies especially in the informal sector, rural areas, and deprived female groups.