The Correlation between Minimum Wage and Economic Strength in Asia

Sep 7, 2017
Scatter plot of shadow economies and GDP

In Asia, the correlation between economic strength and the minimum wage is somewhat strong.  The majority of nations on the continent have a per capita GDP PPP below 30,000 international dollars and a minimum wage below 10,000 international dollars.  The only countries that surpass both of these numbers are Kuwait, Oman, Japan, South Korea, Israel, and Turkey.

Findings

  • The correlation coefficient between per capita Gross Domestic Product (GDP) in Purchasing Power Parity (PPP) and minimum wage in Asia is 0.60.
  • As economic strength increases in Asia, the minimum wage also increases.
  • Yemen has the lowest minimum wages on the continent but manages to have the second smallest per capita GDP PPP.
  • Afghanistan has the smallest per capita GDP PPP but has the 13th lowest minimum wages.
  • Kuwait has the largest per capita GDP PPP but the 17th highest minimum wage on the continent.
  • Oman on the other hand, has the highest minimum wage but only the second largest per capita GDP PPP.

Caveats

  • As always, correlation does not imply causation.
  • Bahrain, Brunei, Cambodia, Cyprus, Hong Kong, North Korea, Macao, Maldives, Palestine, Qatar, Saudi Arabia, Singapore, Syria, Taiwan, and the United Arab Emirates were missing data.
  • Minimum wages sometimes vary by profession and other variables.

Details

The former Soviet republics all have low minimum wages and a low per capita GDP PPP.  South Asia also joins the double low club.

Outside of former Soviet republics and South Asia, the rest of the continent has a mix of low and high numbers.

Per capita GDP PPP as a multiple of minimum wage, ranges from 0.60 in Afghanistan where the minimum wage is higher than the per capita GDP PPP to 49.48 in Yemen.

Country Codes

CodeCountry
AFAfghanistan
AMArmenia
AZAzerbaijan
BDBangladesh
BTBhutan
CNChina
GEGeorgia
IDIndonesia
ILIsrael
INIndia
IQIraq
IRIran
JOJordan
JPJapan
KGKyrgyzstan
KRSouth Korea
KWKuwait
KZKazakhstan
LALaos
LBLebanon
LKSri Lanka
MMMyanmar
MNMongolia
MYMalaysia
NPNepal
OMOman
PHPhilippines
PKPakistan
THThailand
TJTajikistan
TLTimor-Leste
TMTurkmenistan
TRTurkey
UZUzbekistan
VNVietnam
YEYemen

Sources

US Department of State.  2017.  "Country Reports on Human Rights Practices for 2016."  Accessed September 2, 2017.  https://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#wrapper.

"Report for Selected Country Groups and Subjects (PPP Valuation of Country GDP)."  https://www.imf.org/external/pubs/ft/weo/2017/01/weodata/weorept.aspx?pr.x=43&pr.y=19&sy=2017&ey=2017&scsm=1&ssd=1&sort=country&ds=.&br=1&c=512%2C672%2C914%2C946%2C612%2C137%2C614%2C546%2C311%2C962%2C213%2C674%2C911%2C676%2C193%2C548%2C122%2C556%2C912%2C678%2C313%2C181%2C419%2C867%2C513%2C682%2C316%2C684%2C913%2C273%2C124%2C868%2C339%2C921%2C638%2C948%2C514%2C943%2C218%2C686%2C963%2C688%2C616%2C518%2C223%2C728%2C516%2C558%2C918%2C138%2C748%2C196%2C618%2C278%2C624%2C692%2C522%2C694%2C622%2C142%2C156%2C449%2C626%2C564%2C628%2C565%2C228%2C283%2C924%2C853%2C233%2C288%2C632%2C293%2C636%2C566%2C634%2C964%2C238%2C182%2C662%2C359%2C960%2C453%2C423%2C968%2C935%2C922%2C128%2C714%2C611%2C862%2C321%2C135%2C243%2C716%2C248%2C456%2C469%2C722%2C253%2C942%2C642%2C718%2C643%2C724%2C939%2C576%2C644%2C936%2C819%2C961%2C172%2C813%2C132%2C199%2C646%2C733%2C648%2C184%2C915%2C524%2C134%2C361%2C652%2C362%2C174%2C364%2C328%2C732%2C258%2C366%2C656%2C734%2C654%2C144%2C336%2C146%2C263%2C463%2C268%2C528%2C532%2C923%2C944%2C738%2C176%2C578%2C534%2C537%2C536%2C742%2C429%2C866%2C433%2C369%2C178%2C744%2C436%2C186%2C136%2C925%2C343%2C869%2C158%2C746%2C439%2C926%2C916%2C466%2C664%2C112%2C826%2C111%2C542%2C298%2C967%2C927%2C443%2C846%2C917%2C299%2C544%2C582%2C941%2C474%2C446%2C754%2C666%2C698%2C668&s=PPPGDP&grp=0&a=.  International Monetary Fund.

Filed under: Correlations