The differentiated effects of minimum wage reforms on unemployment Evidence from the Greek labor market

The paper studies the relative effect between two groups, a treatment group of low-wage workers and a control group of high-wage workers, when a minimum wage reform is introduced. The empirical analysis uses a rich dataset from the Greek labor market over the period between 2010 and 2020. The study examines whether the employees’ responses and the potential effects of two different minimum wage reforms on unemployment were heterogenous. Our results are straightforward: among the two groups, the relative possibility of job loss is associated with an increase in the minimum wage, while the relative possibility of job search difficulty is strongly affected by a minimum wage cut. The former result is getting worse for employees who engaged in a minimum wage-intensive sector in the previous year and are now inactive. The latter result is reinforced for very young workers.