SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS Alatas and Cameron(2003) analyzed the case of several emerging economies and showed that the minimum wage affected employment in smaller companies with local capital, but not in larger corporations with foreign owners. According to Kuddo et al.(World Bank, 2015) the trend in the recent literature is that the impact of the minimum wage on employment is, in general, low or insignificant and even positive in some cases. Abowd et al.(2009) estimated, in the case of France, that the impact of the minimum wage on employment was higher if the share of the minimum wage in the country-level average wage was higher. Addison et al.(2009) demonstrated that the increase of the minimum wage caused only a marginal decline of employment in the sectors concerned, even in periods of significant economic recession. Therefore, the assumption that economic recession is the most unfavorable moment for increasing the minimum wage is not verified. Schmitt(2013) concluded that the negative impact of the minimum wage is lower if the minimum wage to average wage ratio is lower, if the share of wage costs in the total costs is smaller and if the companies are able to cushion the minimum wage effects by other measures. Conversely, the impact is higher if the proportion of employees earning the minimum wage or an income close to it is larger, as shown by Herr and Kazandziska, 2011. Broecke et al. (2015) reviewed the literature on the most relevant emerging economies in the world and demonstrated that the increase of the minimum wage has a low or statistically insignificant impact on employment, except for the vulnerable categories, i.e. low-skilled, young and low-income persons. The results obtained depend on the methodology used, as well as on the variables considered. The IMF(2016a) estimated the impact of the minimum wage share on the youth employment rate based on a panel of 15 economies in Central and Eastern Europe. Thus, a 1% rise expansion of the minimum wage share caused a decline by 0.15% of the youth employment rate after one quarter. Moreover, a 1% rise in the minimum wage to productivity ratio reduced youth employment by around 3%. In fact, the response of youth employment to the changes in the minimum wage tends to be more significant in the economies with higher unemployment rates, as Addison et al.(2013) demonstrated for the United States of America. Relationship between minimum wage and the informal sector of the labor market The minimum wage can be interpreted as a matter of labor market rigidity, often expressed in terms of ratio to the average wage. It is considered that, the higher this ratio, the greater the pressure on employment, due to the discrepancy between the productivity differential and the wage differential in the sectors with medium and higher skills, compared to the lower-skill sectors. One of the ways to adjust this discrepancy is by expanding employment in the informal sector or by increasing evasion by declaring a larger number of employees as being paid the minimum wage. On one hand, the increase of the minimum salary can reduce to a greater extent formal employment, if the ability of the informal sector to absorb the workforce surplus is higher. On the other hand, the wage increase in the formal sector can result in the employment of a larger proportion of persons who were previously active in the informal sector, as a consequence of the higher incentives for looking for a formal job, as estimated by Magruder, 2013, Bhorat et al., 2014. Regarding the impact of the minimum wage on the informal sector of the labor market, Filion(2009) argued that, on one hand, the welfare recipients and informal workers would be stimulated to work in the formal sector of the economy and, on the other hand, the rise of the wage costs might determine the employers to avoid declaring all the employees or to pay formal wages for part time jobs, although the workers are used full time, which results in illegal wage payments. Magruder(2013) showed that, by the positive 7