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The effect of minimum wage hikes on employment: Evidence from regional panel data from Romania

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  • Pantea, Smaranda

Abstract

Minimum wage hikes aim to increase the income of low-wage workers and improve their labour market participation. However, there are concerns that large increases may reduce employment, especially in countries where minimum wages increased quickly and whose competitiveness depends, at least partly, on low production costs. This study examines the employment effect of large increases in the minimum wage in Romania between 2008 and 2016. It uses regional (NUTS III) data and dynamic panel methods. The results do not support the hypothesis that minimum wage hikes reduce employment. They are robust to the use of different econometric methods, plausible variations of the specification and definitions of the key variables. Moreover, the results suggest insignificant effects even for low wage, less developed or high unemployment regions.

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  • Pantea, Smaranda, 2020. "The effect of minimum wage hikes on employment: Evidence from regional panel data from Romania," Economic Systems, Elsevier, vol. 44(3).
    • Handle: RePEc:eee:ecosys:v:44:y:2020:i:3:s0939362518300487
    DOI: 10.1016/j.ecosys.2020.100805
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    More about this item

    Keywords

    Employment; Minimum wage; Regional labour markets; Transition economies;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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