Between Benefits and Risks for Sustainable Economic Growth: Minimum Wage’s Impact on Youth Unemployment Across Five CEE Countries

Viorela Denisa Stroe, Daria Elisa Vuc (), Marius Cristian Pană, Mina Fanea-Ivanovici and Robert Maftei
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Viorela Denisa Stroe: Doctoral School of Economics I, Faculty of Theoretical and Applied Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Daria Elisa Vuc: Doctoral School of Economics I, Faculty of Theoretical and Applied Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Marius Cristian Pană: Faculty of Theoretical and Applied Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Mina Fanea-Ivanovici: Faculty of Theoretical and Applied Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Robert Maftei: Institute of Business Administration from the Municipality of Bucharest, Asebuss Business School, 012101 Bucharest, Romania

Sustainability, 2025, vol. 17, issue 21, 1-26

Abstract: Minimum wage changes have long influenced labour market debates, raising interest in their effects on youth workers and on policies that aim to reduce wage disparities while fostering sustainable economic growth. This article examines the relationship between minimum wage adjustments and youth unemployment in five CEE countries: Bulgaria, Hungary, Poland, Romania and Slovakia. Institutional arrangements related to the minimum wage are complex and the study outlines both potential benefits and risks for inexperienced employees. A fixed-effects panel regression over 2010–2024 is employed, with the econometric model implemented in Python (version 3.11) to assess the impact of minimum wage increases on youth unemployment. The variables considered are minimum wage levels, youth unemployment, labour productivity, inflation, GDP per capita and NEET rate. The results reveal a positive and statistically significant relationship, suggesting a trade-off between higher minimum wages and youth opportunities in the region. However, the impact varies depending on each country’s institutional context. Moreover, market-oriented policies and inclusive institutions are essential for achieving a sustainable balance between income protection and employment opportunities. Overall, the article contributes to developing context-specific labour market policies within the framework of sustainable development, stressing the importance of wage-setting institutions in promoting resilient and inclusive employment.

Keywords: minimum wage; youth unemployment; labour market; panel data; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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