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MINIMUM WAGE AND BUSINESS ENVIRONMENT IN ROMANIA: AN INSTITUTIONAL PERSPECTIVE (International Conference "Recent Advances in Economic and Social Research", 13-14 mai 2015, București)

Marius-Cristian Pana ()
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Marius-Cristian Pana: Bucharest University of Economic Studies,

Institute for Economic Forecasting Conference Proceedings from Institute for Economic Forecasting

Abstract: The institutional economics perspective is less present in the field of minimum wage law’s implications, despite the fact that labor market is one of the most regulated markets in every economy. At its beginnings, the minimum wage legislation has been subject of intense controversies between the institutionalist and neoclassical economists, but the mainstream point of view has gained ground. Still, in the last decade the institutional economics perspective has made some progress in this area, its contributions being limited to justifying the necessity of the minimum wage legislation based on some arguments borrowed from the old institutionalists, especially from John Commons. This paper is focused on the minimum wage law’s implications on the business environment in Romania. The institutional hypothesis that guides the entire reasoning in this paper is: any entrepreneurial endeavor means, basically, that the entrepreneurs act in an existing institutional frame. The formal regulations, such as minimum wage legislation, affect entrepreneurial behavior by creating and altering transaction costs. The aim of this paper is to offer an explanation to the evasive entrepreneurship in Romania using the concept of transaction costs related to the institutional rigidities created by the minimum wage legislation.

Keywords: minimum wage law; transaction costs; institutional economics; evasive entrepreneurship (search for similar items in EconPapers)
JEL-codes: B25 J58 L26 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2015-12
New Economics Papers: this item is included in nep-hme and nep-tra
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