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An assessment of minimum wages, education and unemployment in the Asia Pacific countries

By Tran Hoang Tuan (VNP 24)

Supervisor: Prof. Vo Hong Duc

Abstract:

Policies on minimum wages are generally perceived as an important and effective tool for policymakers to ensure that workers, in particular for unskilled and semi-skilled workers, have been paid reasonably for their employment. The minimum wage regulations have been adopted by various countries for a long time regardless of their economic growth levels. However, empirical findings are mixed from studies for developed countries. The issue has also been investigated for developing countries. The Asian Pacific region has emerged as a new world’s economic and financial centre. However, the assessments of the importance of the minimum wages policies have been largely ignored in empirical studies. In response to this observation, this study is conducted to examine the inter-relationship between the minimum wage, unemployment of total, unemployment of youth, education and some macro-economic factors (Inflation, FDI, GDPg, Population, external debt) for 17 Asian countries, where required data are available, for the period from 2008 to 2017. Findings from this study indicate that an increase in the minimum wage is associated with an increase in the unemployment rate for both the entire labour market and the youth labour market. However technological changes have positively contributed to the ease of the unemployment rates in the region. Education appears to be an important factor in any consideration of youth unemployment while macroeconomics factors just play a small role in joblessness.

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