Title: Is a higher minimum wage associated with a higher youth employment rate? A panel data analysis

Authors: Ana Iolanda Vodă; Ana-Maria Bercu; Jarmila Sebestova

Addresses: Institute for Interdisciplinary Research, Social Sciences and Humanities Research Department, Alexandru Ioan Cuza University of Iasi, Iași, Romania ' Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Iași, Romania ' School of Business Administration in Karvina, Silesian University in Opava, Opava, Czech Republic

Abstract: The successful integration of young members of the workforce into the labour market has been a topic of great interest for European decision makers since the onset of the recent financial and economic crisis. Ten years after this challenging event the employment rate still remains at lower levels especially among young members of the workforce. Although in EU member states, particularly in Central and Eastern Europe, the statutory minimum wage has recently been increased, there are concerns among decision makers that this policy may have negative effects on employment. This paper examines the effect of the minimum wage on the regional youth employment rate, using a panel of 628 NUTS II regions from various European states, during 2008-2014. We began by using the methodology introduced by Neumark and Wascher, where labour market outcomes at regional levels are related to the relative minimum wage (Kaitz index). We have estimated a canonical equation based on the Stata version 13.0 software package. Our results indicate that increases in the minimum wage have a significant effect on employment.

Keywords: Central and Eastern Europe; economic crisis; economic development; EU-28; Kaitz index; labour market structure; minimum wage; panel data; regional level; workforce; youth employment rate.

DOI: 10.1504/EJIM.2021.118569

European Journal of International Management, 2021 Vol.16 No.4, pp.631 - 646

Received: 14 Jul 2018
Accepted: 21 Dec 2018

Published online: 29 Oct 2021 *

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