The article focuses on the impact of the minimum wage on the labor market. We use the ratio of the minimum wage and a living wage as a tool of social welfare measurement. We show four main labor market rates, on which the minimum wage has an impact. Using Kaitz index we determine the ability of wage to ensure a minimally decent standard of living on the labor markets. We compare minimum wage, Kaitz index and unemployment rate in order to characterize labor markets chosen for the analysis of foreign countries. For the Russian labor market we create the dynamics of the minimum wage level and the unemployment rate since 2000. We identify the main problems and make recommendations for state policy improvement in minimum wages.
Highlights:
- the mechanism of minimum wage formation varies in different countries
- the minimum wage can impact the level of poverty, the differentiation of regions and other factors in the country
- Germany set the minimum wage at the national level only in 2014
- in Belgium the growth of the minimum wage is accompanied by a slight increase of the unemployment rate over the entire period
- in 2016 the living wage is also higher than the minimum wage (6204 rubles) on about 38%, the minimum wage in Russia does not guarantee employees a minimum needs provision
- the minimum wage does not solve the problems of poverty, the reducing income inequality, and is not able to provide the necessary needs of employee
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