Abstract
There is still an ongoing debate on employment effects of minimum wage. Not only the magnitude, but also the direction of the effect is a matter of concern.
Economic theory on its own cannot unanimously resolve the dispute as it provides concepts within which both negative and positive effects are conceivable. In order to integrate the empirical findings, I deployed a meta-regression analysis (MRA) to systematically review 187 estimates from 18 empirical studies that estimated minimum wage elasticities of employment for countries of the EU.
The results show that, overall, there is no practically significant employment effect of minimum wage. Also, no evidence of publication selection bias was found.
A more sophisticated, multivariate MRA identified differential effects for specific industries, namely residential home care and retail sector for which the employment effects are significantly negative. The results also indicate that minimum wage negatively affects female employment.
Finally, the multiple MRA also investigated whether the employment effects differ across three wider regions of the EU (the West, the South, and the East). The results provide robust evidence of significant differential effects, and show that minimum wage has moderately negative employment effects in the eastern countries of the EU.