The effects of minimum wage raise on employment are much disputed in the literature. We found three possible
debates and ways to organize the review of recent literature on the effect of raising the minimum wage: employment
and unemployment effects; geographical, demographic and sectorial specificities; the relationship with business
cycles.
We think that the research on the effect of raising minimum wage on employment is not relevant any more.
Arguments came from theory, empirical evidence and examples like Romania. Another conclusion related to our
literature review is that any study on the effects of raising minimum wage has to be conducted at national or regional
level because the effect depends on the share of minimum wage paid workers, the relative minimum wage (expressed
as share of average salary), legal and cultural characteristics who is paid at minimum wage, how many teenagers
work, etc. Studies focusing on groups of countries are in most cases irrelevant. For example, in Romania it is not
relevant to study the effects of raising minimum wage based on
in workforce is low. The age of the first job is significantly higher than in other countries, like US or Canada.
So, why should we care about minimum wage? There is a paradox: even minimum wage is a restriction imposed
on labour market but the effects are on other markets. When we raise the minimum wage, nothing happen in terms of
employment and unemployment, so we have to think there are other parts of the economy and other markets that
support the effect. Research challenges in this context are to identify the markets and the point which elasticity changes
and the economy became more sensitive to minimum wage policies.