The Impact of Minimum Wages on Consumption in EU Countries

Abstract

In this paper, we investigate the significance of the relationship between minimum wages and consumption in EU countries between 1999 and 2021 using panel regression and cluster analysis. We can show a statistically significant effect of the minimum wage on consumption, in a negative direction. For Eastern European countries, the short-term effect of minimum wage growth on consumption is positive, but in the long term, the overall effect is negative. The results of the paper are supported by the outputs of other authors on the effects of minimum wages on employment and consumer prices.