Publication details

Impact of minimum wage dynamics on unemployment: an empirical approach


SCHULZ Jaroslav MIKULA Štěpán

Year of publication 2014
Type Article in Proceedings
Conference Proceedings of the International Scientific Conference QUANTITATIVE METHODS IN ECONOMICS Multiple Criteria Decision Making XVII
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords minimum wage; dynamics; unemployment; institutions; wage policy
Description This paper deals with the impact of minimum wage dynamics on the unemployment rate. We provide an empirical analysis of unbalanced panel of 24 countries in the period of 1985-2009 based on a broad data set from OECD and Penn World Tables (v8.0) databases. The effect of minimum wage is controlled for influence of business-cycle as well as labor markets’ institutional setting and unemployment benefits. Our results indicate that the significance of the effect found depends on the measure used. The real minimum wage growth rate has a positive and significant effect on unemployment rate but the estimates obtained for median-based measures of minimum wage are insignificant. Despite the statistical significance the economic effect found is very limited. Presented results stress the need for a deeper understanding of the distortions caused by the minimum wage.
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