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Relationship between Youth Unemployment and Minimum Real Wage: An Empirical Analysis of the Hungarian Labor Market Using Multivariate Least Squares Regression Analysis

In: Proceedings of FIKUSZ '14

Author

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  • Domonkos F Vamossy

    (Whitworth University)

Abstract

One of the best known predictions of standard economic theory is that an increase of minimum wage decreases employment and thus job opportunities of low-skilled, low-experienced workers. This paper provides an in depth analysis of the dynamics of the Hungarian youth employment. An econometric model is set up, and a Multivariate Least Squares Regression Analysis was performed to describe and predict the market's behavior. It is found that if minimum real wage increases by one percent, youth unemployment will increase by approximately one percent as well. Therefore, the results of the regression analysis supports the theory. It is also shown how the financial crisis, investment, and the number of students studying at universities impact the labor market.

Suggested Citation

  • Domonkos F Vamossy, 2014. "Relationship between Youth Unemployment and Minimum Real Wage: An Empirical Analysis of the Hungarian Labor Market Using Multivariate Least Squares Regression Analysis," Proceedings of FIKUSZ '14, in: Pál Michelberger (ed.),Proceedings of FIKUSZ '14, pages 285-290, Óbuda University, Keleti Faculty of Business and Management.
    • Handle: RePEc:pkk:sfyr14:285-290
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    References listed on IDEAS

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    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. Meyer, Robert H & Wise, David A, 1983. "Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth," Econometrica, Econometric Society, vol. 51(6), pages 1677-1698, November.
    3. Charles Brown & Curtis Gilroy & Andrew Kohen, 1983. "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 3-31.
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    Cited by:

    1. Dan ARMEANU & Carmen PASCAL, 2017. "The Economic and Social Impact of Minimum Wage," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 51(3), pages 57-72.
    2. Urbánné Mező, Júlia & Udvari, Beáta, 2016. "Munkapiaci rugalmasság és ifjúsági foglalkoztathatóság [Labour-market flexibility and youth employment]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 431-460.

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    Keywords

    Real Minimum Wage; Youth Unemployment;

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