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The Impact of Minimum Wage on Average Earnings in the Caribbean using Two-Selected Countries, Trinidad and Tobago and Jamaica (1980-2011 and 1997-2011)

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  • Bamikole, Oluwafemi

Abstract

This paper examines the impact of minimum wages on average wage earnings in two selected countries, Trinidad and Tobago and Jamaica using a time-series data for the latter and a panel data for both. The methodology of GMM time-series estimation is used on the Jamaican data (1980-2011) and a Two Stage Least Square Regression model is used for the panel data (1997-2011). The impacts of minimum wage on average earnings are mixed. In the time-series model, the real minimum wage has a negative and significant impact on the real average earnings, a unit change in the minimum wage decreases earnings by $2. However, in the panel model, the minimum wage positively impacts the real average wage by the same amount. Thus, the minimum wage alone cannot be used to boost average earnings; emphasis needs to be placed on the productivity of workers and the cost of doing business in the Caribbean.

Suggested Citation

  • Bamikole, Oluwafemi, 2013. "The Impact of Minimum Wage on Average Earnings in the Caribbean using Two-Selected Countries, Trinidad and Tobago and Jamaica (1980-2011 and 1997-2011)," MPRA Paper 57363, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57363
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    References listed on IDEAS

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    More about this item

    Keywords

    GMM; Two-Stage Least Squares; Minimum Wage; Average Earnings;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • J0 - Labor and Demographic Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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