Minimum wages and compliance : the case of Trinidad and Tobago

On April the 6th of 1998 the government of the Republic of Trinidad and Tobago introduced a National Minimum Wage for the first time. Using the Trinidad and Tobago labour force survey we show that potential costs, if there had been full compliance, could have been substantial. An examination of employment and the wage distribution in aggregate shows that the actual degree of compliance was fairly low however. Nevertheless, an econometric investigation on a panel of individuals provides evidence that the minimum wage did cause some individuals to experience a wage increase, while others consequently lost their job. Differential impacts across firm size suggest that the "formality" of the firm may be an important factor in compliance.