Ex-ante Evaluation of the Impact of Increases in Minimum Wages on Labor Market Outcomes in Kosovo
This paper uses microsimulation techniques to quantify the potential ex-ante impacts of several minimum wage increases on labor market outcomes in Kosovo. The results show that the overall impacts of a minimum wage increase in the baseline scenario...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/820291597160948272/Ex-ante-Evaluation-of-the-Impact-of-Increases-in-Minimum-Wages-on-Labor-Market-Outcomes-in-Kosovo http://hdl.handle.net/10986/34354 |
| Summary: | This paper uses microsimulation
techniques to quantify the potential ex-ante impacts of
several minimum wage increases on labor market outcomes in
Kosovo. The results show that the overall impacts of a
minimum wage increase in the baseline scenario are likely to
be modest, although the impacts for some groups may be
stronger. In the most extreme scenario, an increase to 250
euros per month, the simulated unemployment rate increases
by 0.4 percentage point in the short term and about 0.6
percentage point in the long term. The youth unemployment
rate (ages 15-24) is anticipated to increase by up to 1.1
percentage points in this scenario, a relatively large
increase considering the already high levels of unemployment
among this group. Similarly, unemployment among the
unskilled (with primary school or less) is simulated to
increase by 0.6 percentage point in the short term and up to
0.8 percentage point in the long term. The paper finds that,
even if raising the minimum wage is long overdue, due to
decreasing nominal wages in real terms, policy needs to
strike a fine balance between protecting workers and
ensuring that employment effects are not too large. |
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