Labour market regulation and deregulation in Papua New Guinea

In the mid-1970s, minimum wages in Papua New Guinea were more than doubled in real terms. Following almost 20 years of stagnant urban employment and growing urban crime, minimum wage regulations were largely removed in 1992. We use a CGE model which incorporates the estimated effects on urban crime of changes in legal job opportunities to estimate the effects of re-imposing the pre-1992 level of minimum wages. In the medium-run, with investment held constant, the welfare loss (EV) would equal 1.35% of national consumption and unskilled employment in the urban regulated sector would fall by 17.5%.