General Linear Model on the Contribution of Changes to Minimum Wage in the Nigerian Economy

Abstract

This paper discussed the contribution of changes in the minimum wage in the Nigerian Economy. The statistical technique adopted in this paper is the General Linear Regression Model. Some of the assumptions such as autocorrelation, multicollinearity, and homoscedasticity were tested, and they were all satisfied. Secondary data were collected from the CBN statistical bulletin from 1980 to 2012. The joint test hypotheses rejected the null hypothesis, which means that changes in minimum wage has significant contributions to the Nigerian economy between the years under study. Rejection of H₀ in the joint hypothesis led to testing the parameters individually, which we found out that real gross domestic product, composite cosumer price index and per capital income are significant  while labour force, inflation rate and interest rate are insignificant. These results explained that real gross domestic product, composite consumer price index and per capital income have significant impact on the changes of minimum wage. The coefficient of determination (R²), which indicates the proportion in Y that is explained by X's turned out with a high percentage of 90.3% showing that there is a strong relationship between the changes in minimum wage and RGDP, CCPI, PCI, LF, INFL, IR. This result entails that 90.3% (percent) variation on the minimum wage rate is explained by a change in the Nigerian Economy variables used in this paper.