Minimum Wage and Employment: Sectoral and Regional Perspectives
IMF Working Papers, November 14, 2025
Source details
- Canonical URL
- Minimum Wage and Employment: Sectoral and Regional Perspectives
Other formats
Bibliographic details
- Authors: Yan Chen, Jiaxiong Yao
- Published: November 14, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229030779.001
Overview and scope
- Authors: Yan Chen, Jiaxiong Yao
- Publication date: November 14, 2025
- Series: Working Paper No. 2025/241
- Pages: 44
- Volume: 2025
- Issue: 241
- DOI: https://doi.org/10.5089/9798229030779.001
- Stock No: WPIEA2025241
- ISBN: 9798229030779
- ISSN: 1018-5941
- Context: Most European countries have a single national minimum wage. An increase in minimum wage implies shocks of different magnitudes to sectors and subnational regions.
Methods and identification
- Empirical approach: Uses sectoral and regional variations of minimum wage to average wage ratios in European countries.
- Estimation techniques: Local projections and generalized random forests.
- Objective: Estimate dynamic and heterogeneous treatment effects of minimum wage changes on employment.
Key findings
- Short-term effects:
- The average employment effects of minimum wage increases tend to be negligible in the short term.
- Medium- to long-term effects:
- The average employment effects of minimum wage increases tend to be negative in the medium to long term.
- Heterogeneity of effects:
- Employment effects are heterogeneous in gender.
- Employment effects are heterogeneous in age.
- Employment effects are heterogeneous in the size of the minimum wage increase.
- Employment effects are heterogeneous in the minimum wage to average wage ratio.
- Threshold effect at the sectoral level:
- Minimum wage increases appear to have a threshold effect on employment at the sectoral level.
- The employment effects become negative when the minimum wage is above 35 percent of the sectoral average wage.
Subject classification and keywords
- Subject: Employment, Employment rate, Labor, Minimum wages, Wage adjustments, Wages
- Keywords: effects of minimum wage, employment, employment effect, Employment rate, IMF working papers, Minimum wage, minimum wage change, minimum wage increase, Minimum wages, treatment effect, Wage adjustments, Wages
Source: IMF Working Papers — "Minimum Wage and Employment: Sectoral and Regional Perspectives" by Yan Chen and Jiaxiong Yao, November 14, 2025, Working Paper No. 2025/241.
Content in this bundle
- Working Paper