Effects of Raising Minimum Wage: Theory, Evidence and Future Challenges

Abstract Minimum wage is one of the most studied topics in economics. This paper examines some of the most important issues related to the effects of raising minimum wage, based on new contributions in theoretical and empirical research, roughly since 2008. Our purpose was to find in the literature an explanation for the recent raise of minimum wage, in some European Union countries and United States and to identify possible effects of this evolution. Most of the studies point little or no employment response to modest increases in the minimum wage, but we argue there are some other effects to consider.