The heterogeneous regional effects of minimum wages in Poland

M Albinowski, P Lewandowski - Economics of Transition and …, 2022 - Wiley Online Library
Economics of Transition and Institutional Change, 2022Wiley Online Library
We evaluate the impact of large minimum wage hikes on employment and wage growth in
Poland between 2004 and 2018. We estimate panel data models utilizing the considerable
variation in wage levels, and in minimum wage bites, across 73 Polish NUTS 3 regions. We
find that minimum wage hikes had a significant positive effect on wage growth and a
significant negative effect on employment growth only in regions of Poland that were in the
first tercile of the regional wage distribution in 2007. These effects were moderate in size …
Abstract
We evaluate the impact of large minimum wage hikes on employment and wage growth in Poland between 2004 and 2018. We estimate panel data models utilizing the considerable variation in wage levels, and in minimum wage bites, across 73 Polish NUTS 3 regions. We find that minimum wage hikes had a significant positive effect on wage growth and a significant negative effect on employment growth only in regions of Poland that were in the first tercile of the regional wage distribution in 2007. These effects were moderate in size, and appear to be more relevant for wages. Specifically, if the ratio of minimum wage to average wage had remained constant after 2007, by 2018, the average wages in these regions would have been 3.2% lower, while employment would have been 1.2% higher. In the remaining two‐thirds of Polish regions, we find no significant effects of minimum wage hikes on average wages or on employment.
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