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Minimum wages and labor market outcomes: evidence from the emerging economy of Russia

  • Alexander Muravyev

    ()

    (Institute for the Study of Labor (IZA, Bonn) and St. Petersburg University Graduate School of Management.)

  • Aleksey Oshchepkov

    ()

    (Center for Labor Marker Studies, Higher School of Economics (HSE), Moscow.)

This paper revisits the effect of minimum wages on employment by taking advantage of a unique institutional setting and data from Russia. The main strength of the paper is the use, for identification purposes, of the large variation in labor market outcomes as well as in the minimum wage across the 89 regions (states) over 10 years, from 2001 to 2010. The study relies on the standard methodology introduced by Neumark and Wascher, in which various labor market outcomes at the regional level are related to the relative minimum wage (captured by the Kaitz index) in a panel setting. We find adverse effects of the minimum wage on young workers in the form of higher unemployment among those aged 16-24. There are also signs that minimum wage increases lead to higher unemployment in the general population, but the effect is small. Our analysis also suggests that higher minimum wages lead to an increase in the share of workers employed in the informal sector.

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Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 29/EC/2013.

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Length: 33 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, April 2013, pages 1-33
Handle: RePEc:hig:wpaper:29/ec/2013
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