Investigating the Impact of Minimum Wages on Jordan’s Industrial
Exports
SHADI ARSHID MUSLIM SARAIREH, IBRAHIM MARWAN KHANJI, RULA MUSTAFA AIROUT
Department of Finance and Banking
Amman University College - Balqa Applied University
Salt 19117, P.O.Box 206
JORDAN
Abstract: The purposes of the paper was to discusses the effects of minimum wages on industrial exports of Jordan
and its main focus is on the empirical view of minimum wages and their significance in industrial exports in
Jordan. A mixed-method approach has been selected where primary and secondary analysis of the data has been
conducted to assess the impact of minimum wages on Jordan’s industrial exports. The key findings of the paper
revealed that there is a significant and positive relationship between industrial exports and minimum wages. In
addition, the Pearson correlational value is .411, which means there is a significant and moderate correlation
between these two variables. Moreover, the standardized beta coefficient of minimum wages is .411, which is
moderate. 1 % change in minimum wages brings about 41.1% changes in industrial exports. Therefore, it is
concluded that there is a significant and positive influence of minimum wages on industrial exports. The
researchers are intending to investigate the minimum wages in individual sectors, more precisely the influence of
minimum wages on Jordanian pharmaceutical industry.
Keywords: Minimum Wage, Exports, Industrial Exports, Economy, Labor, Jordan.
Received: July 27, 2021. Revised: January 7, 2022. Accepted: March 5, 2022. Published: March 24, 2022.
1 Introduction
In the current era, the countries are focusing
intensively on economic affairs. The world has moved
to the next step in economic competition. In this
regard, states assess, design, and implement economic
policies to upgrade their economic output. One of the
essential factors considered is exports. Exports refer to
selling goods or services produced to another country
[1]. Exports tend to be significant contributors to the
growth of the economy [2]. Similarly, exports are
influenced by various factors which include the
logistics performance index, official exchange rates,
insurance and financial services, and employee wages
[3], [4], [5]. This article also evaluates the impact of
minimum wages on the industrial exports of Jordan;
considering employee wages.
The Tripartite Committee determined minimum
wages in Jordan. In addition, the wage is determined
in the Jordan Currency [6]. The committee holds the
member for two years. This committee exists to
enforce the labor laws. Similarly, those, who do not
follow the minimum wages, are marked penalty by the
committee. In brief, the implementation of the
minimum wage is found in Jordan as effective. Many
studies in different countries have been conducted to
analyses and assess the influence of minimum wages
on exports, which tends to be a critical factor in
developing countries.
2 Literature Review
Chen examined the effects of minimum wages in
China and revealed that firms actively and intensively
engaged in the exports tend to face more minimum
wage effects [7]. However, the downstream industries
were less affected by the minimum wage laws. Also,
the exports were affected by trade as it influenced the
pro-competitive impact thereby benefitting the skilled
labor force and the exporters. Hence, the findings of
this article concluded that wage inequality issue was
more severe in upstream industries instead of
downstream sectors due to larger export share of
sales.
Furthermore, Akgunduz et al. analysed the impact
of minimum wages on the Exporters in Turkey and
stated that the impact of minimum wages was
considered pivotal in developing countries [8].
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Minimum wage was found to be a major contributor
to the motivation of the larger population to work
productively in such countries. In addition, the
organizations use it as a competitive advantage to
increase employee performance. The findings of this
study were in congruence with Bai et al. who studied
and investigated the impact of minimum wages on
exports in China and concluded that exports were
highly affected by raising the minimum wages in such
middle-income settings [9].
Moreover, the country's firms are considered
essentials of exports, and the higher productive and
competitive firms tend to be better at exports.
Similarly, it is highly needed for the countries to
enhance their local production first. A well-known
model, given by Melitz, concluded that firms have to
be most completive and productive at first, and then
they can enter into international market or exports
[10]. Hence, such productivity and competitiveness
can also be achieved by minimum wages.
Exports, as signified by Aghion et al. (2018) are
influenced by many factors such as unemployment,
labor substitution, and product prices. Bai et al. (2021)
also examined the effects of minimum wage rises on
various elements, including exports and found that
minimum wage creates higher unemployment rate.
This is due to an increase in the cost of labor for the
firms, which as a result, shortened their hires.
Consequently, an aggregate action of firms leads to
higher unemployment. Similarly, it was found by
Aghion et al. (2018) that minimum wages raised
products prices. The increasing cost of labor forces
firms to raise their prices to meet the firm’s economic
objective. However, it leads to higher prices of those
firms’ production in the international market.
Moreover, the minimum wage influences industrial
exports negatively, as it increases the cost of labor,
leading to an increase in products prices. As a result,
exports tend to decline due to higher prices. In brief,
the exports of labor-intensive goods are declined due
increase in the minimum wage.
Minimum wage law affects unemployment in
developed countries. According to Alaniz, Gindling,
and Terrell, workers whose minimum wage is nearer
to 20% are usually influenced more [11]. Mostly, it is
considered as a problem for developing countries than
developed countries. Therefore, it is the most studied
topic in the underdeveloped and developing world.
Similarly, Akgunduz et al. also supported that
influence of minimum wages is considered essential
in developing countries [12]. Developing countries
hold growing firms and other sectors. Hence, those
firms, which are on the growing face, tend to be very
sensitive towards the cost of productions. They
usually have not achieved economies of scale.
Therefore, there are affected most. Moreover, the
developing countries are structured with a major
population that belongs to the middle class; thus,
sometimes minimum wages increase the productivity
of employees, which ultimately leads to higher firm
performance. Consequently, the aggregate supply and
exports of the country increase to a larger extent. In
brief, the minimum wage motivates workers to work
more productively.
Industrial exports are considered as vital assets for
the country’s economy. Governments usually provide
subsidies to develop their local industry and make it
competitive so that they can compete on an
international level. This is primarily done to boost
exports. In contrast, the governments impose
minimum wage laws to reduce the poverty level and
upgrade the living standards of workers. Melitz
emphasized that the competitiveness of the local firms
is to be developed at first [10]. This will make these
firms eligible for international market expansion and
competition. As a result, it will generate a good
economic return for the home country in the form of
exports incomes. However, it becomes a complex
situation, as higher minimum wage impacts negatively
on the firms’ performance and the objective of
economic boost remains unfulfilled [9]. Nevertheless,
this is not always the case; as most of the time,
minimum wages are likely to enhance productivity
and competitiveness among firms.
Moreover, the empirical view of the effects of
minimum wages has been divided into two categories.
The first category considers that real wages are
flexible and there are distorted inter-industry wages.
The second category concluded that there are distorted
industrial wages in all the industries. Artuc et al.
evaluated the first category of researchers and
concluded that capital intensity is increased in
response to the increase in the minimum wages [13].
This leads to a decline in industrial productivity.
Similarly, the study indicated that an increase in
wages would cause a boost in exports, considering the
capital intensities are industry-specific. In addition,
unemployment remains affected, similar to what other
writers stated. Gumata and Ndou evaluated another
category of researchers by combining the two
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production technologies (with constant returns), two
factors (with constant returns), and two countries [14].
The study revealed that exports or output was
decreased by the increase in minimum wages,
specifically labor-intensive goods. However, the
exports of capital-intensive goods keep increasing.
According to Sun, Tian, and Zhang, the country
can specialize in the exports and production of local
firms by imposing a sufficient higher minimum wage
[15]. In other words, there will be higher productivity
in labor-intensive goods; thus, the industrial exports
will increase [16], [17]. Similarly, Jiao, Liu, and Liu
added that the exports would continue boosting for a
longer time [18]. However, Hau, Huang, and Wang
concluded that firms’ exports would decline with the
increase in the local minimum wage [19].
Interestingly, it was found that minimum wage and
industrial output were positively associated. It shows
clearly an increase in the welfare and consumption of
customers due to an increase in the minimum wage in
the closed economy.
Along with these scholars, there were some other
remarkable studies that seemed to have similar
findings. Nidhiprabha has investigated the relationship
between minimum wage and exports in Thailand [20].
It was revealed how this relationship works in the
Asian region. It was observed that a high wage rate
would not harm the industry as long as labor
productivity rises in line with increasing wage rates.
Industries are likely to suffer when unemployment
rises rapidly with the increase in the wage rate.
However, if labor productivity rise is in line with
increasing wage rates, then the economy is likely to
experience a rise in exports due to improved
productivity. This assures that a positive correlation
exists between the minimum wage rate and exports. In
another study, Jermsittiparsert et al. studied how
minimum wages influence economic competitiveness
[21]. The research revealed that export has a long-run
relationship with minimum wage [22]. Plus, it was
observed that minimum wage has a causal relationship
with exports. This suggests that an increase in the
minimum wage is likely to influence the level of
exports and, in return, will enhance economic
competitiveness.
3 Research Aim
This paper aims to analyze the effects of minimum
wages on the Industrial exports of Jordan. The
findings can be used by scholars, industrialists,
students, firms, managers, and policymakers, and the
results can further be utilized in policy
implementation.
4 Dataset and Results
4.1 Dataset
The main dataset for this study was retrieved from
World Bank and World Economic Outlook Databases
for the secondary data analysis. For the primary data,
a close-ended survey was conducted from 142
participants working in the industrial sector of Jordan.
The demographics and the results of the collected data
have been indicated in this section. SPSS version 26,
Excel, and Nvivo were used to analysis the data.
4.2 Demographics
A total of 142 participants were included in the survey
of which 85.2% were males and only 14.8% were
females.
Table 1. Gender
Gender
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Fema
le
21
85.2
85.2
85.2
Male
121
14.8
14.8
100.0
Total
142
100.0
100.0
The age was categorized into four divisions and it was
found that people between 40 to 65 years were the
highest in numbers (37.3 %), followed by the age
group between 20 to 30 years, representing 32.4 % of
the people. In addition, the lowest number of users fell
in the age group 15 to 20 years which were only 7.7 %
of total individuals. In last, around 22.5 % of
individuals aged 30-40 years.
Table 2. Age
Age
Frequenc
y
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
15-
20
year
s
11
7.7
7.7
7.7
20-
46
32.4
32.4
40.1
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30
year
s
30-
40
year
s
32
22.5
22.5
62.7
40-
65
year
s
53
37.3
37.3
100.0
Tota
l
142
100.0
100.0
4.3 Content Analysis
4.3.1 Minimum Wages
The minimum wage tends to be fairly paid in Jordan.
Similarly, the participants of the study agreed to this
study’s proposition. 73.9 % of the participants
strongly agreed that wages were paid fairly in the
country. Similarly, 19.7 % agreed, 5.6 % remained
neutral. However, only 0.7 % disagreed with the
statement. Hence, it is found that wages are paid fairly
within the country.
Table 3. There is a fair minimum wage paid
There is a fair minimum wage paid
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Strong
ly
Disagr
ee
1
.7
.7
.7
Neutra
l
8
5.6
5.6
6.3
Agree
28
19.7
19.7
26.1
Strong
ly
Agree
105
73.9
73.9
100.0
Total
142
100.0
100.0
Moreover, the participants were asked regarding
the implementation of the minimum wage laws and it
was found that the laws were strictly followed within
Jordan. It is found that (around 78.9 %) strongly
agreed that laws were followed, 15.5 % agreed, 3.5 %
remained neutral. In contrast, 2.1 % disagreed that
wage laws were followed. In brief, it can be said that
minimum wage laws are followed in Jordan.
Table 4. Minimum wage laws are followed
Minimum wage laws are followed
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Disagr
ee
3
2.1
2.1
2.1
Neutra
l
5
3.5
3.5
5.6
Agree
22
15.5
15.5
21.1
Strong
ly
Agree
112
78.9
78.9
100.0
Total
142
100.0
100.0
The respondents were then asked regarding the
motivation linked to higher minimum wages and it
was found that around 58.5 % strongly agreed that
wages tend to be a satisfactory factor for performance.
23.2 % agreed, 14.1 % remained neutral to the
statement, and 2.8 % disagreed. However, 1.4%
strongly disagreed with the research’s proposition that
higher minimum wages encourage employees to work
more. In sum, it is revealed that higher minimum
wages increase the performance of employees, which
leads to a greater output for the firm. Jordan is a
developing economy. In such an economy, minimum
wages impact higher on employee motivation.
Akgunduz et al. stated that minimum wages affect the
workers more in developing countries [12]. Similarly,
this study’s results indicated that higher minimum
wages impact the motivation of employees more
which are in congruence to the findings of Akgunduz
et al.
Table 5. Higher minimum wages motivate employees
to work more
Higher minimum wages motivate employees to
work more
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Strong
ly
Disagr
ee
2
1.4
1.4
1.4
Disagr
4
2.8
2.8
4.2
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ee
Neutra
l
20
14.1
14.1
18.3
Agree
33
23.2
23.2
41.5
Strong
ly
Agree
83
58.5
58.5
100.0
Total
142
100.0
100.0
Bai et al. found that minimum wage creates
unemployment more [9]. This is due to an increase in
the cost of labor for the firms, which as a result, limits
the daily wages. Consequently, an aggregate action of
firms leads to higher unemployment. Similarly, it was
found that minimum wages raised products prices.
The increasing cost of labor forces firms to raise their
prices to meet the firm’s economic objective. One
factor remains the same that has been highlighted by
the studies earlier. It is concluded in the past studies
that minimum wages increase firm costs. Similarly,
this study also examined this perspective. It was found
that (around 52.1 %) strongly agreed that wages tend
to increase the firm costs. 25.2 4 agreed, and 20.4 %
remained neutral to the statement. However, 2.1 %
disagreed with the research’s proposition that higher
minimum wages increase firm costs. In sum, it is
revealed that higher minimum wages boost the labor
costs at first, which negatively affects the industrial
output.
Table 6. Minimum wages increase the firm costs
Minimum wages increase the firm costs
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Disagr
ee
3
2.1
2.1
2.1
Neutra
l
29
20.4
20.4
22.5
Agree
36
25.4
25.4
47.9
Strong
ly
Agree
74
52.1
52.1
100.0
Total
142
100.0
100.0
4.3.1 Industrial Exports
Firms’ productivity of its workers leads to higher
output for the firm, which then becomes an aggregate
industrial export the country. Minimum wages tend to
be the beneficial factor for the homes country to
increase the level of exports. Similarly, this study
found that (around 24.6 %) of participants strongly
agreed that minimum wages increase the productivity
of workers. 33.8 % agreed, 29.6 % remained neutral
to the statement, and 3.5 % disagreed. However, 8.5%
strongly disagreed with the research’s proposition that
higher minimum wages increase productivity. In sum,
it is revealed that higher minimum wages increase the
productivity of labor, which can lead to a positive
contribution to industrial exports. According to Bai et
al., most of the time, minimum wages are likely to
enhance productivity and competitiveness among
firms [9]. Hence, the study’s findings are aligned with
the research conducted by previous authors.
Table 7. Minimum wages increase productivity
Minimum wages increase productivity
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Strong
ly
Disagr
ee
12
8.5
8.5
8.5
Disagr
ee
5
3.5
3.5
12.0
Neutra
l
42
29.6
29.6
41.5
Agree
48
33.8
33.8
75.4
Strong
ly
Agree
35
24.6
24.6
100.0
Total
142
100.0
100.0
The focus on the minimum wages and their
impact on exports remains a prominent topic in
literature. This study has tried to evaluate its effects
on industrial exports. Interestingly, (around 51.4 %) of
participants strongly agreed that an increase in
minimum wages leads to an increase in exports. 28.9
% agreed, 15.5 % remained neutral to the statement,
and 2.1 % disagreed. In contrast, only 2.1% strongly
disagreed with the study’s statement that increases in
minimum wages are likely to increase firms’ exports.
In brief, it is concluded that governments can increase
industrial exports by increasing minimum wages.
However, these results contradict the findings of
Artuc et al., who found that that exports or output was
decreased by the increase in minimum wages,
specifically labor-intensive goods [13]. However, the
exports of capital-intensive goods keep increasing. In
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another way, the study of Sun, Tian, and Zhang have
supported that implementation of minimum wages
may increase the industrial output or exports [15].
Table 8. If the minimum wage is increased, firm
exports will likely increase
If the minimum wage is increased, firm exports
will likely increase
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Strong
ly
Disagr
ee
3
2.1
2.1
2.1
Disagr
ee
3
2.1
2.1
4.2
Neutra
l
22
15.5
15.5
19.7
Agree
41
28.9
28.9
48.6
Strong
ly
Agree
73
51.4
51.4
100.0
Total
142
100.0
100.0
This study has added that minimum wages
enhance the efficiency of labor at the very start.
Similarly, around 45.8 % of participants strongly
agreed that minimum wages enhance the efficiency of
labor. 21.8 % agreed, 23.9 % remained neutral to the
statement, and 4.2 % disagreed. In contrast, only 4.2
% strongly disagreed with the study’s statement that
minimum wages tend to boost the efficiency of labor.
In conclusion, it is found that firms can increase the
efficiency of labor by increasing minimum wages.
Furthermore, Meltiz stated that a firm’s
competitiveness tends to be a very important factor in
its exports’ success [10]. The study concluded that the
industry could achieve such competitiveness by
implementing higher minimum wages. Similarly, this
study has found that minimum wages increase the
efficiency of labor. This efficiency ultimately leads to
higher firm performance and industrial exports.
Table 9. Minimum wages enhance the efficiency of
labor
Minimum wages enhance the efficiency of labor
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Strong
ly
Disagr
ee
6
4.2
4.2
4.2
Disagr
ee
6
4.2
4.2
8.5
Neutra
l
34
23.9
23.9
32.4
Agree
31
21.8
21.8
54.2
Strong
ly
Agree
65
45.8
45.8
100.0
Total
142
100.0
100.0
In last, the study focused on asking participants
whether their firms have increased or not by marking
a minimum wage. As a result, research participants
(around 45.1 %) indicated and strongly agreed that
minimum wage has increased exports of their firm
over time. 29.6 % agreed, and 20.4 % remained
neutral. However, 4.9 % disagreed with the study’s
proposition. In brief, it is found that a higher
minimum wage has increased exports of different
firms that led to an increase in industrial exports.
These results are supported by Sun et al., who have
added that the country can specialize in the exports
and production of local firms by imposing a sufficient
higher minimum wage [15]. In brief, there will be
higher productivity in labor-intensive goods; thus,
industrial exports will increase.
Table 10. Higher minimum wages have increased our
firm’s output
Higher minimum wages have increased our firm’s
output
Frequen
cy
Perce
nt
Valid
Perce
nt
Cumulati
ve
Percent
Vali
d
Disagr
ee
7
4.9
4.9
4.9
Neutra
l
29
20.4
20.4
25.4
Agree
42
29.6
29.6
54.9
Strong
ly
Agree
64
45.1
45.1
100.0
Total
142
100.0
100.0
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4.4 Descriptive Statistics
This section of the research focuses on the summary
of variable responses to make an analysis and draw
findings. These findings help to identify to what
extent responses differ from the average response. In
addition, it identifies the non-supporting and
supporting data. The results of this study are discussed
below.
4.4.1 Minimum Wages
Element 02 of the minimum wages section has the
highest mean value (around 4.71) with a moderate
dispersion in the responses (around .637). This means
that response of participants regarding the minimum
wage law implementation directs towards strongly
agree. Similarly, the mean value of all variables is
greater than 4, which indicates that all the respondents
have agreed to this study’s statements in the majority.
Table 11. Descriptive Statistics
Descriptive Statistics
N
Ra
n
Mi
n
Ma
x
Mea
n
Std.
Dev
.
Var
There is
a fair
minimu
m wage
paid
14
2
4
1
5
4.66
.65
1
.42
4
Minimu
m wage
laws are
followed
14
2
3
2
5
4.71
.63
7
.40
5
Higher
minimu
m wages
motivate
employe
es to
work
more
14
2
4
1
5
4.35
.92
3
.85
2
Minimu
m wages
increase
the firm
costs
14
2
3
2
5
4.27
.86
0
.74
0
Valid N
(list
wise)
14
2
4.4.2 Industrial Exports
Moreover, 2nd element of the industrial export tends to
have the highest mean value (around 4.25) with
(around .941) standard deviation. This indicates that,
on average, participants have agreed that if minimum
wages are increased, it leads to higher industrial
exports. Similarly, most sample responses have a
mean value close to 4 with lower dispersion in them.
In sum, the research participants have supported that
minimum wages influence industrial exports
positively.
Table 12. Descriptive Statistics
Descriptive Statistics
N
Ra
n
Mi
n
Ma
x
Mea
n
Std.
Dev
.
Var
Minimum
wages
increase
productiv
ity
14
2
4
1
5
3.63
1.14
6
1.31
4
If
minimum
wage is
increased
, firm
exports
will
likely
increase
14
2
4
1
5
4.25
.941
.886
Minimum
wages
enhances
productiv
ity of
labor
14
2
4
1
5
4.01
1.12
0
1.25
5
Higher
minimum
wages
have
increased
our
firm’s
output
14
2
3
2
5
4.15
.914
.836
Valid N
(list wise)
14
2
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4.5 Matrix of Correlations
The matrix of correlation helps to identify the
association among variables. Similarly, it is part of
econometric analysis. This study has indicated the
following relationship between minimum wages and
industrial exports.
Table 13. Correlations
Correlations
Minimum
Wages
Industrial
Exports
Minimum
Wages
Pearson
Correlation
1
.411**
Sig. (2-
tailed)
.000
N
142
142
Industrial
Exports
Pearson
Correlation
.411**
1
Sig. (2-
tailed)
.000
N
142
142
**. Correlation is significant at the 0.01 level (2-
tailed).
First, there is a very significant and positive
correlation between minimum wages and industrial
exports. It is found that the significance value of the
relationship between industrial exports and minimum
wages is .000. In addition, the Pearson correlational
value is .411, which means there is a significant and
moderate correlation between these two variables.
4.6 Reliability and Validity
The validity and reliability of the data are considered
very important before the analysis. Hence, the results
for such tests are written below.
Table 14. Reliability Statistics
Reliability Statistics
Cronbach's
Alpha
Cronbach's
Alpha Based
on
Standardized
Items
N of
Items
Minimum
Wages
.706
.712
4
Industrial
Exports
.642
.641
4
The minimum wages section has Cronbach’s
Alpha value greater than 0.7, which indicates that data
is reliable to be run for the tests. Similarly,
Cronbach’s alpha of industrial exports section is also
higher than 0.6; hence it is also valid data. Moreover,
the thumb rule of the validation of data is considered
0.5 for validity. In sum, the value of both variables is
greater than 0.5.
4.7 ANOVA
ANOVA refers to the analysis of variance. It is used
to indicate whether there is a significant difference
among the sample respondent or not. The significant
difference is counted as favorable and validates the
data. Similarly, the findings of such analysis are
attached following.
Table 15. ANOVA with Friedman’s Test
ANOVA with Friedman’s Test
Minimum Wages
Sum of
Squares
df
Mean
Square
Friedman’
s Chi-
Square
Sig
Between People
181.248
141
1.285
Within
People
Between
Items
20.681a
3
6.894
48.743
.000
Residual
160.069
423
.378
Total
180.750
426
.424
Total
361.998
567
.638
Grand Mean = 4.50
a. Kendall’s coefficient of concordance W = .057.
Industrial Exports
Between People
291.706
141
2.069
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Both variables (minimum wages and industrial
exports) have a significance value (p-value) less than
0.05, which indicates that there is a significant
difference among the participants’ responses.
Moreover, the F-statistics value for minimum wages
and industrial export is 48.743 and 39.456,
respectively. This value is higher, which indicates that
research participants have higher varying responses to
each other.
4.8 Regression Analysis
Regression analysis helps to understand the impact of
independent variables on a dependent variable. In
addition, it gives an overview of how much a variable
explains another variable. This test is used to calculate
the significance level and to what extent one variable
influences another. The following sections evaluate the
major part of econometric analysis.
Table 16. Model Summary
Model Summary
M
od
el
R
R
Sq
uar
e
Adj
uste
d R
Squ
are
Std.
An
erro
r of
the
Esti
mat
e
Change Statistics
R
Sq
uar
e
Ch
ang
e
F
Ch
ang
e
d
f
1
d
f
2
Sig
. F
Ch
ang
e
1
.4
11
a
.16
9
.163
.657
95
.16
9
28.
459
1
1
4
0
.00
0
a. Predictors: (Constant), Minimum Wages
The model summary suggests a p-value less than
0.05, which indicates that the model is fit and
significant to be used. In addition, the value of r
squared is .169, which means that 16. 9 % of the
dependent variable is explained by the independent
variable. In other words, changes in minimum wages
create 16.9 % variations in industrial exports.
Table 17. ANOVA
ANOVA
Model
Sum of
Square
s
df
Mean
Squar
e
F
Sig.
1
Regressio
n
12.320
1
12.32
0
28.45
9
.000
b
Residual
60.606
14
0
.433
Total
72.926
14
1
a. Dependent Variable: Industrial Exports
b. Predictors: (Constant), Minimum Wages
Moreover, there are significant differences among
the responses of minimum wages and industrial
exports. The p-value is less than 0.05. Hence, the
model is fit.
Table 18. Coefficients
Coefficients
Model
Unstandardiz
ed
Coefficients
Standardiz
ed
Coefficien
ts
t
Sig
.
B
Std.
Error
Beta
1
(Constan
t)
1.663
.443
3.75
3
.00
0
Minimu
m
Wages
.521
.098
.411
5.33
5
.00
0
a. Dependent Variable: Industrial Exports
In last, coefficients indicate the extent of influence.
This table fulfills the objective of the research to
evaluate the effects of minimum wages on industrial
exports. The findings indicate that minimum wages
have a p-value of 0.000, which is less than 0.05. This
means that minimum wages significantly influence
industrial exports. Moreover, the standardized beta
coefficient of minimum wages is .411, which is
Within
People
Between
Items
31.977a
3
10.659
39.456
.000
Residual
313.273
423
.741
Total
345.250
426
.810
Total
636.956
567
1.123
Grand Mean = 4.01
a. Kendall’s coefficient of concordance W = .050.
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moderate. In other words, 1 % change in minimum
wages brings about 41.1% changes in industrial
exports. Therefore, it is concluded that there is a
significant and positive influence of minimum wages
on industrial exports.
4.9 Secondary Data Analysis
The objective of this study was to investigate the
impact of Minimum Wages on Jordan’s Industrial
Exports. Exports can be influenced by various factors;
here, specific attention has been given on evaluating
the effects of minimum wages on industrial
development in Jordan. Hence, the data for minimum
wages and exports in Jordan was collected. World
Bank and World Economic Outlook Databases were
used to gather data. For Investigating the impact of
minimum wages on Jordan’s industrial exports, two
statistical tests were used, including regression and
correlation. These tests assessed the impact of
minimum wages on Jordan’s industrial exports. Final
conclusions were made based on the results of these
two tests.
The table shown below represents the descriptive
statistics. This shows that 22 observable values were
tested to investigate the impact of Minimum Wages on
Jordan’s Industrial Exports. The exports ranged from
USD 3.5 Billion to USD 16.2 Billion during 1999-
2020. On the other hand, the Minimum wage rate
ranged from USD 101 to USD 315 during 1999-2020.
The average exports were USD 10.3 Billion, and the
average minimum wage rate was USD 208.7. Later 5%
trimmed mean close to the normal mean. This suggests
that this data is less likely to be influenced by outliers.
Table 19. Descriptive Statistics
Descriptive Statistics
Statistic
Std. Error
Export in billion
Mean
10.376
.9509
95%
Confidence
Interval for
Mean
Lower
Bound
8.398
Upper
Bound
12.353
5% Trimmed
Mean
10.438
Median
11.880
Variance
19.893
Std. Deviation
4.4601
Minimum
3.5
Maximum
16.2
Range
12.6
Interquartile
Range
8.6
Skewness
-.402
.491
Kurtosis
-1.476
.953
Minimum Wage
Rate
Mean
208.773
16.6952
95%
Confidence
Interval for
Mean
Lower
Bound
174.053
Upper
Bound
243.492
5% Trimmed
Mean
208.828
Median
213.500
Variance
6132.089
Std. Deviation
78.3077
Minimum
101.0
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Maximum
315.0
Range
214.0
Interquartile
Range
152.5
Skewness
-.035
.491
Kurtosis
-1.652
.953
To assess the impact of Minimum Wages on
Jordan’s Industrial Exports, it was required to assess
the correlation between the variables. Pearson
correlation was used to assess the relationship between
the variables [23]. This technique helps in examining
the relationship between the variables along with their
strength and direction [24]. Results show whether the
relationship between the variable was significant or
not. At a 5% significance level, P-value (sig.) is less
than alpha. Data provide sufficient evidence to
conclude that there is a significant positive correlation
exists between two variables (i.e., Export and
Minimum Wage Rate). This depicts that is a strong
positive relationship exists between Exports in Jordan
and the minimum wage rate in Jordan. The correlation
coefficient was equal to .916. This proves that there is a
strong positive relationship between the variables. This
suggests that an increase in the minimum wage rate
will also lead to an increase in exports in Jordan.
Table 20. Correlation Analysis
Correlations
Export
billion
Minimum Wage
Rate
Export billion
Pearson
Correlation
1
.916**
Sig. (2-tailed)
.000
N
22
22
Minimum Wage Rate
Pearson
Correlation
.916**
1
Sig. (2-tailed)
.000
N
22
22
Correlation is significant at the 0.01 level (2-tailed).
The second technique used to investigate the
relationship between exports and minimum wage rate
was regression analysis. It is a statistical process for
examining the relationship between a dependent
variable and an independent variable [25]. The table
provided below represents the model summary of the
regression model. The R-square value is around 0.84.
This indicates that 84% of the variance in the
dependent variable is caused by the independent
variable. In other words, 84% of the variance in exports
can be attributed to the minimum wage rate.
Table 21. Regression Analysis Model Summary
Model Summary
Model
R
R
Squar
e
Adjust
ed R
Squar
Std. Error of
the Estimate
e
1
.
9
1
6
a
.840
.832
1.8303
a. Predictors: (Constant), Min Wage Rate
The table provided below represents the regression
model fitness. As the p-value for the F-test is less than
the significance level, the sample data provide
sufficient evidence to conclude that the regression
model fits the data.
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Table 22. Regression Analysis ANOVA Table
ANOVA
Model
Sum of
Squares
df
Mean
Square
F
Sig.
1
Regressio
n
350.746
1
350.746
104.69
7
.000b
Residual
67.002
20
3.350
Total
417.748
21
a. Dependent Variable: Export billion
b. Predictors: (Constant), Min Wage Rate
The decision rule for regression analysis suggests
that if the p-value is less than the significance level
(0.05), there is a significant relationship between the
variables. Results provided in the table below suggest
that at a 5% significance level, P-value (sig.) is less
than alpha. At a 5% significance level, the data
provide sufficient evidence to conclude that there is a
significant relationship exist between the two
variables. In other words, data provide sufficient
evidence to conclude that there is a significant
relationship exist between the minimum wage rate
and exports.
Table 23. Regression Analysis Coefficients
Coefficients
Model
Unstandar
dized
Coefficien
ts
Standar
dized
Coeffici
ents
t
Si
g.
B
Std.
Err
or
Beta
1
(Const
ant)
-
.52
0
1.1
34
-
.45
8
.6
52
Mini
mum
Wage
Rate
.05
2
.00
5
.916
10.
232
.0
00
a. Dependent Variable: Export billion
5 Discussion
Findings revealed that there is a strong positive
correlation exists between Exports in Jordan and the
minimum wage rate in Jordan. The correlation
coefficient was equal to .916. This proves that there
is a strong positive relationship between the
variables. This suggests that an increase in the
minimum wage rate will also lead to an increase in
exports in Jordan. These findings contradict the
observations of Bai et al. [9]. He claimed that
minimum wages influence various elements,
including exports, unemployment, labor substitution,
and product prices. He claimed that the minimum
wage influences industrial exports negatively, as it
increases the cost of labor, leading to an increase in
products prices. As a result, exports tend to decline
due to higher prices. In brief, the exports of labor-
intensive goods are declined due increase in the
minimum wage. Bai et al. claim that sometimes, it
becomes a complex situation, as higher minimum
wage impacts negatively on the firms’ performance
and objective of economic boost remained unfulfilled
[9].
However, this study's observations seem to be in
line with the findings of Akgunduz et al. [12]. They
claimed that the minimum wage motivates workers to
work more productively. Moreover, the developing
countries are structured with a major population that
belongs to the middle class; thus, sometimes
minimum wages increase the productivity of
employees, which ultimately leads to higher firm
performance. Consequently, the aggregate supply and
exports of the country increase to a larger extent.
Sun, Tian, and Zhang are also aligned with similar
views [15]. They believe that the country can
specialize in the exports and production of local
firms by imposing a sufficient higher minimum
wage. This means that there will be higher
productivity in labor-intensive goods; thus, the
industrial exports will increase. As a result, exports
will continue boosting for a longer time. They also
experienced during the analysis that minimum wage
and industrial output were positively associated. This
concludes that an increase in the welfare and
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consumption of customers is due to an increase in the
minimum wage rate.
Results for regression revealed that there is a
significant relationship exist between the minimum
wage rate and exports. These results also seem to be
in harmony with the findings of Aghion et al., who
supported that influence of minimum wages is
considered essential in developing countries [26].
They studied that the developing countries are
structured with major population that belongs to the
middle class; thus, sometimes minimum wages
increase the productivity of employees, which
ultimately leads to higher firm performance.
Consequently, the aggregate supply and exports of
the country increase to a larger extent. In brief, the
minimum wage motivates workers to work more
productively. The results of Jermsittiparsert et al.
seem to be in harmony with this study's results [21].
Jermsittiparsert et al. discovered that export has a
long-run relationship with minimum wage. The
author also claimed that minimum wage has a causal
relationship with exports. This suggests that an
increase in the minimum wage is likely to influence
the level of exports and, in return, will enhance
economic competitiveness. A similar relationship has
been observed in the findings of this study.
Moreover, these results are aligned with the
observations of Nidhiprabha, who investigated the
relationship between minimum wage and exports in
Thailand [20]. He observed that a high wage rate
would not harm the industry as long as labor
productivity rises in line with increasing wage rates.
Industries are likely to suffer when unemployment
rises rapidly with the increase in the wage rate.
However, if labor productivity rise is in line with
increasing wage rates, then the economy is likely to
experience a rise in exports due to improved
productivity. This assures that a positive correlation
exists between the minimum wage rate and exports.
6 Conclusion
The objective of this paper was to investigate the
impact of minimum wages on Jordan’s industrial
exports. Exports can be influenced by various factors,
but this study has considered evaluating the effects of
minimum wages on industrial development in Jordan.
Previously, authors have provided a contradicted
view, where some authors have observed a
relationship between the minimum wage rate and
exports. At the same time, other authors concluded
them as unrelated variables. The statistical tools used
in this study to assess the impact of minimum wages
on Jordan’s industrial exports concluded that there
exists a relationship between two variables. Findings
revealed that there is a strong positive correlation
exists between Exports in Jordan and the minimum
wage rate in Jordan. The value of the correlation
coefficient depicted that there is a strong positive
relationship between the variables. Plus, regression
analysis revealed that there is a significant
relationship exist between the minimum wage rate
and exports. Based on these two results, it was
concluded that a relationship exists between the
minimum wage rate and exports in Jordan. This
relationship appears to be positive, which shows that
an increase in the minimum wage rate will increase
the country’s exports level.
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