Public vs. Private Sector Earnings Differentials in the Caribbean Region: Evidence from the Economy of Trinidad & Tobago

This article uses 1993 data from the Trinidad and Tobago Continuous Sample Survey of the Population to investigate patterns of remuneration across its public and private sectors. Unlike results from developed countries, the large earnings premium to public sector workers in Trinidad & Tobago appears to be explained more so by differences in returns to characteristics valued by the labor market than by differences in levels of these characteristics. The large public sector earnings premium is also more likely to benefit the most disadvantaged workers in the economy, Africans and women. These two findings highlight the possibility that the government is using its ability to pay its workers differentially in order to offset private sector ethnic and gender discrimination. Hence, the current move towards privatization of nationalized industries in Trinidad and Tobago is likely to have the impact of increasing ethnic and gender earnings inequity.