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Comments On The Interdependence Between The Minimum Wage, Prices And Other Types Of Wages

Author

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  • Simona GHITA

    (Academy of Economic Studies, Bucharest)

Abstract

Most of the times, the minimum wage is regarded as main instrument of poverty diminishment. From the experience of developed countries it results that the increase of the minimum wage must carefully be determined so as not to trigger negative effects on employment, and not to exceed the one of the average wage. The International Monetary Fund has shown concern with respect to the consequences of increasing minimum wage, indicating that even agreeing with social programmes, the significant increase of the minimum wage above the level of labour productivity increase shall hinder the deflation process ad the Romanian economic competitiveness and that would affect, finally, more population categories with lowest incomes. The paper researches, in its first part, the relation between the minimum wage, the average wage and the level of inflation from the theoretical viewpoint, and in the second a statistical analysis is performed with respect to the evolution of these indicators and the relationship between them in Romania for the period after 1990.

Suggested Citation

  • Simona GHITA, 2005. "Comments On The Interdependence Between The Minimum Wage, Prices And Other Types Of Wages," Romanian Journal of Economics, Institute of National Economy, vol. 21(2(30)), pages 72-81, December.
    • Handle: RePEc:ine:journl:tome:21:y:2005(xv):i:2(30):p:72-81
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    More about this item

    Keywords

    minimum wage; price; level of inflation;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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