2026 Working Papers

Public support for raising minimum wages as a policy response to economic inequality is increasing; however, empirical evidence from highly informal and weakly regulated labour markets remains limited. This study estimates the impact of minimum wage increases on earnings and hours worked in Pakistan, drawing on 21 waves of nationally representative Labour Force Survey data between 1992 and 2021. By leveraging national time variation in statutory minimum wages and pre-policy district exposure, proxied by the proportion of workers earning below the minimum wage prior to policy changes, we find that increases in the minimum wage are associated with statistically significant but modest gains in real hourly earnings, with stronger wage pass-through observed in local labour markets with higher initial exposure. The benefits are disproportionately greater for male workers; however, the policy has achieved only limited and uneven progress in reducing gender pay disparities. On the intensive margin, minimum wage increases are associated with reductions in hours worked, particularly among women. This pattern is consistent with adjustment through hours in segments characterised by part-time work and weaker compliance. Overall, the findings indicate that minimum wage policy can increase earnings in low-wage areas under conditions of partial compliance, yet has limited capacity to address persistent structural gender inequality in highly informal contexts. These results underscore the need for stronger enforcement and complementary, gender-sensitive labour market interventions

Abstract: We study how structural disadvantage (e.g., race, class, gender) shapes the formation of subjective beliefs about the returns to effort. We formalize and distinguish between psychological constructs such as locus of control, self-efficacy, and grit, and study their response to structural disadvantage and policy interventions. In our model, individuals share the same (unknown) innate ability, and beliefs about success can only be updated through effort. However, agents fail to internalize the dynamic feedback between effort and belief formation. Structural disadvantage raises the threshold of belief required to justify effort, increasing the likelihood of falling into a pessimistic low-effort trap. We characterize the conditions under which psychological interventions that bound beliefs from below and enhance grit improve welfare, and when such interventions must be complemented by policies that relax external constraints to be effective.

Using Danish administrative data linked to two independent, validated postpartum depression screenings, we study how postpartum mental health shocks shape women’s labor market trajectories. Event-study estimates show no pre-birth differences in trends between depressed and non-depressed mothers, but persistent employment gaps that widen immediately after birth. Health-care utilization patterns indicate that these differences reflect acute mental health shocks rather than pre-existing trends. The penalties are concentrated among less educated mothers and those in less family-friendly jobs. Our results highlight postpartum depression as a meaningful and unequal contributor to the motherhood penalty.

We leverage the introduction of the first antibiotic therapies in 1937 to examine the long run effects of early childhood pneumonia on adult educational attainment, employment, income, and work-related disability. Using census data, we document large average gains on all outcomes, alongside substantial heterogeneity by race and gender. On average, Black men exhibit smaller schooling gains than white men but larger employment and earnings gains. Among Black men (and women), we identify a pronounced gradient in gains linked to systemic racial discrimination in the pre–Civil Rights era: individuals born in more discriminatory Jim Crow states realized much smaller gains than those born in less discriminatory states. There is no similar gradient among white Americans. Women of both races exhibit smaller education and earnings gains than men on average, consistent with cultural and institutional barriers to women’s work. Our findings highlight the role of opportunities in shaping the extent to which investments in early-life health translate into longer run economic gains.