A1167
Title: Does aging matter in the impact of the minimum wage on inflation
Authors: Sylwia Roszkowska - Jagiellonian University (Poland) [presenting]
Aleksandra Majchrowska - University of Lodz (Poland)
Abstract: The aim is to examine how demographic changes impact the transmission of minimum wage increases to inflation. The minimum wage growth can raise the prices of goods and services and accelerate inflationary processes. At the same time, a shrinking workforce and changes in its structure could lead to changes in the impact of minimum wage increases on the economy. The minimum wage augmented Phillips curve framework is used to extend the demographic variables. The sample of 21 European Union countries in 2003-2023 and panel data techniques are employed. It has been proven that the strength of the minimum wage pass-through effect on inflation depends on demographic factors. The aging of the workforce and shrinking workforce size weaken the impact of minimum wage increases on inflation. On the contrary, a lower proportion of the less educated working-age population strengthens the minimum wage pass-through effects on inflation. Results have important implications for macroeconomics, minimum wage, and education policies.
