Firm-level Consequences of Large Minimum-wage Increases in the Czech and Slovak Republics



Abstract.  After an initial decline in the level of real minimum-wage rates, there were series of unusually large increases in their levels — 70 and 50 per cent — during the years 1999–2002 in the Czech and Slovak Republics, respectively. Using information from matched employee–employer data sets, we look at the impact of minimum-wage hikes on both wages and employment. Our results suggest that there are some, but not substantial, job losses in reaction to minimum-wage hikes and that the impact on firm wages is rather large, implying that further increases of similar magnitude might very well have negative consequences for employment.