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Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam

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  • Nguyen, Cuong

Abstract

It is often argued that minimum wage increases can lead to increased inflation. This paper examines the impact of minimum wage increases on inflation in Vietnam during the 1994-2008 period. Inflation is measured by a monthly overall Consumer Price Index (CPI) and a monthly food CPI. It is found that the minimum wage increases did not increase inflation. Since the minimum wage increases often took place one or two months before the Vietnamese New Year festivals, observed increases in monthly inflation after the minimum wage increases were caused by increased consumption demand during the New Year festivals, not by the minimum wage increases.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36750.

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Date of creation: 20 Mar 2011
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Handle: RePEc:pra:mprapa:36750

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Keywords: Minimum wages; inflation; CPI; Vietnam;

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  1. Jon Frye & Robert J. Gordon, 1980. "Government Intervention in the Inflation Process: The Econometrics of "Self-Inflicted Wounds"," NBER Working Papers 0550, National Bureau of Economic Research, Inc.
  2. Lawrence F. Katz & Alan B. Krueger, 1992. "The effect of the minimum wage on the fast-food industry," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
  3. Lemos, Sara, 2004. "The Effect of the Minimum Wage on Prices," IZA Discussion Papers 1072, Institute for the Study of Labor (IZA).
  4. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.
  5. James M. MacDonald & Daniel Aaronson, 2000. "How do retail prices react to minimum wage increases?," Working Paper Series WP-00-20, Federal Reserve Bank of Chicago.
  6. Daniel Aaronson, 2001. "Price Pass-Through And The Minimum Wage," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 158-169, February.
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Cited by:
  1. Nguyen Viet Cuong, 2014. "Do Minimum Wages Affect Firms’ Labor and Capital? Evidence from Vietnam," Working Papers 2014-179, Department of Research, Ipag Business School.

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