Title: What Do Minimum Wages Do? Evidence from Tanzania

Abstract: To what extent do firms in developing countries comply with minimum wage laws, and how do they affect the location decision of workers? Tanzania enacted its first minimum wage law in 2010, which stipulated different levels for each industry. Using novel data from Tanzania's annual census of firms, I find evidence of partial firm compliance, with no disemployment effects. To assess whether minimum wages are important to workers, I use a spatial equilibrium model which exploits variation in average minimum wages across space to determine their location choice. I find an elasticity of migration with respect to expected earnings of one half. This result is driven by changes in the minimum wage for which the direct effect on migration is 3.4 percent. This suggests that variable minimum wage laws can be used to reallocate labor into more productive sectors, even under partial compliance