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Employer and Employee Ignorance in Developing Countries: The Case of Trinidad and Tobago

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  • Anthony Murphy
  • Eric Strobl

Abstract

The authors examine the degree of employer and employee ignorance about reservation and offer wages in Trinidad and Tobago and find this to be considerable. On average employers pay more than 26% above workers’ reservation wages, while employees earn 22% less than the maximum wage on offer, ceteris paribus. However, there are some differences across sub‐groups of jobs, particularly with regard to individuals’ lack of information about the best wage offers. Some differences are also found compared to previous results for developed nations, although the level of ignorance does not appear to be higher in Trinidad and Tobago.

Suggested Citation

  • Anthony Murphy & Eric Strobl, 2008. "Employer and Employee Ignorance in Developing Countries: The Case of Trinidad and Tobago," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 339-353, May.
    • Handle: RePEc:bla:rdevec:v:12:y:2008:i:2:p:339-353
    DOI: 10.1111/j.1467-9361.2008.00446.x
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    References listed on IDEAS

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    1. Doris Weichselbaumer & Rudolf Winter‐Ebmer, 2005. "A Meta‐Analysis of the International Gender Wage Gap," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 479-511, July.
    2. Patricia Jones, 1998. "The impact of minimum wage legislation in developing countries where coverage is incomplete," CSAE Working Paper Series 1998-02, Centre for the Study of African Economies, University of Oxford.
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    Cited by:

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    2. Reyes, Giovanni E & Chacón, Sandra Milena, 2014. "Colombia 2003-2013: Estructura y tendencias de las exportaciones," Revista Tendencias, Universidad de Narino, vol. 15(2), pages 45-57, July.
    3. Christopher F. Parmeter, 2018. "Estimation of the two-tiered stochastic frontier model with the scaling property," Journal of Productivity Analysis, Springer, vol. 49(1), pages 37-47, February.
    4. Solomon W. Polachek, 2017. "Heterogeneity in the Labor Market: Ability and Information Acquisition," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(3), pages 377-390, June.
    5. Sharif, Najma R. & Dar, Atul A., 2007. "An Empirical Investigation of the Impact of Imperfect Information on Wages in Canada," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 3(1-2), pages 1-19.
    6. Shirong Zhao & Jeremy Losak, 2024. "Two-tiered stochastic frontier models: a Bayesian perspective," Journal of Productivity Analysis, Springer, vol. 61(2), pages 85-106, April.
    7. Alecos Papadopoulos, 2015. "The half-normal specification for the two-tier stochastic frontier model," Journal of Productivity Analysis, Springer, vol. 43(2), pages 225-230, April.
    8. Aydede, Yigit & Dar, Atul A., 2022. "Native-born-immigrant wage gap revisited: The role of market imperfections in Canada," CLEF Working Paper Series 50, Canadian Labour Economics Forum (CLEF), University of Waterloo.

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