| Abstract [eng] |
The aim of the master’s thesis is to evaluate the impact of the policy of increasing the minimum monthly wage in Lithuania on three economic factors - inflation, unemployment, and consumption. The first part of the paper discusses the concept of the minimum monthly wage, describes the main economic theoretical models, presents the results of empirical research obtained by other authors on the impact of minimum monthly wage change on inflation, unemployment, and consumption, as well as applied empirical methods. In the second part, the hypotheses are formulated, and the empirical model used is described. The third part of the paper describes the consistent analysis of the empirical research and presents the results. In order to conduct an empirical study, a set of time series quarterly data for the Lithuanian region is compiled, covering the time interval from the first quarter of 2012 to the last quarter of 2023. Using vector and structural vector autoregressions, it was determined that a 1% increase in the percentage change in the minimum monthly wage trend increases the inflation trend by 1.3%, decreases the percentage change in the unemployment rate trend by 0.75%, and increases the percentage change in the consumer confidence index by 0.62%. Based on the empirical study results and conclusions, the recommendations are given to researchers - to conduct a similar study with a larger sample (monthly data) and to Lithuanian policy makers - to take into account that a drastic increase in the minimum monthly wage can significantly increase inflation, which could negatively affect the growth of the Lithuanian economy. |
