The Minimum Wage Effects on Employment in Manufacturing Industry

Subject Areas : Financial Economics

Safura Javadi ¹ , Hassan Taee ²

1 - M.A. in Economics
2 - Assistant professor in Economics,Allameh Tabatabaee University

Received: 2015-06-13 Accepted : 2015-06-13 Published : 2008-06-21

Keywords: Minimum wage, Third level workers, unskilled workers, manufacturing industries,

Abstract :

This paper aims at investigating the effect of minimum wage on employment composition among Iran's manufacturing industries، using a microeconomic model which has been estimated by GLS and panel data collected from 1375 to 1384.Estimations show that an increase in minimum wage statistically has significant effect on the unskilled employment، and the employment rate of unskilled workers increases when the minimum wage is increased. An important implication of this research is that government requires reconsidering the criteria used for determining the minimum wage in Iran in order to diminish the imbalance in the current labor market. Economic development and level of productivity should be considered as two important criteria of determining the minimum wage