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MINIMUM WAGE AND BUSINESS ENVIRONMENT IN ROMANIA: AN INSTITUTIONAL PERSPECTIVE (International Conference "Recent Advances in Economic and Social Research", 13-14 mai 2015, București)

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  • Marius-Cristian Pana

    (Bucharest University of Economic Studies,)

Abstract

The institutional economics perspective is less present in the field of minimum wage law’s implications, despite the fact that labor market is one of the most regulated markets in every economy. At its beginnings, the minimum wage legislation has been subject of intense controversies between the institutionalist and neoclassical economists, but the mainstream point of view has gained ground. Still, in the last decade the institutional economics perspective has made some progress in this area, its contributions being limited to justifying the necessity of the minimum wage legislation based on some arguments borrowed from the old institutionalists, especially from John Commons. This paper is focused on the minimum wage law’s implications on the business environment in Romania. The institutional hypothesis that guides the entire reasoning in this paper is: any entrepreneurial endeavor means, basically, that the entrepreneurs act in an existing institutional frame. The formal regulations, such as minimum wage legislation, affect entrepreneurial behavior by creating and altering transaction costs. The aim of this paper is to offer an explanation to the evasive entrepreneurship in Romania using the concept of transaction costs related to the institutional rigidities created by the minimum wage legislation.

Suggested Citation

  • Marius-Cristian Pana, 2015. "MINIMUM WAGE AND BUSINESS ENVIRONMENT IN ROMANIA: AN INSTITUTIONAL PERSPECTIVE (International Conference "Recent Advances in Economic and Social Research", 13-14 mai 2015, București)," Institute for Economic Forecasting Conference Proceedings 151208, Institute for Economic Forecasting.
    • Handle: RePEc:rjr:wpconf:151208
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    References listed on IDEAS

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    1. Bruce E. Kaufman, 2009. "Promoting Labour Market Efficiency and Fairness through a Legal Minimum Wage: The Webbs and the Social Cost of Labour," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 306-326, June.
    2. Russell S. Sobel, 1999. "Theory and Evidence on the Political Economy of the Minimum Wage," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 761-785, August.
    3. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521547871.
    4. Cosmin ENACHE, 2012. "Unemployment Benefit, Minimum Wage And Average Salary Earnings In Romania," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 10, pages 85-96, December.
    5. Bruce E. Kaufman, 2010. "Institutional Economics and the Minimum Wage: Broadening the Theoretical and Policy Debate," ILR Review, Cornell University, ILR School, vol. 63(3), pages 427-453, April.
    6. Bruce Kaufman, 2008. "The Non-Existence of the Labor Demand/Supply Diagram, and other Theorems of Institutional Economics," Journal of Labor Research, Springer, vol. 29(3), pages 285-299, September.
    7. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521839198.
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    Cited by:

    1. Alina HAGIU & Marinela BARBULESCU, 2017. "Evolutions In The National And The European Union Business Environment In The Context Of Globalization," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 16(3), pages 181-193.

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    More about this item

    Keywords

    minimum wage law; transaction costs; institutional economics; evasive entrepreneurship;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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