SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS impact on consumption and aggregate demand, the increase of the minimum salary generates more jobs in the formal sector of the economy. In addition to that, the increase of the minimum wage diminished the tendency of certain categories of employees to leave the formal sector and boosted the participation in the professional training programs offered by companies in order to improve productivity and compensate for the rise in the wage costs. In fact, the sectors with a larger proportion of minimum-wage employees see a greater mobility of the workers and, as a consequence, the increase of the minimum wage improves the stability of workers within companies, as Addison et al.(2009) explained. Riley and Bodibene(2015) estimated that the companies with a large proportion of low-payment jobs responded to the increase in the minimum wage by measures intended to improve productivity. Georgiadis(2013) and Owens and Kagel(2010) empirically validated the positive impact of the minimum wage on the motivation of the lower-skilled workers. To conclude, the minimum salary should be correlated with other public policy instruments, e.g. the enforcement of stricter control measures, in order to curb the tendency of employers to declare lower salaries, close or equal to the minimum level, for the purpose of diminishing their wage costs. Considering the existence of this behavior, the increase of the minimum salary can diminish evasion, by reducing the gap between the wage actually paid and the one entered in the accounts, but also expand evasion, if part of the wages that were previously higher than the minimum will be declared at the level of the minimum wage. Relationship between the minimum wage and the wage/income inequality The labor market is deeply divided into two segments: the primary sector, with higher-skilled workers and better working conditions, and the secondary sector, with lower-skilled workers and difficult working conditions. Since the salaries in the primary sector of the labor market are higher than the ones in the secondary sector, the introduction of a minimum wage does not have any direct impact on the higher-skilled sector. However, the implementation of a minimum salary that is higher than the equilibrium level of the secondary sector results in higher unemployment among the lower­skilled workers, as shown in Figure 1. In point of labor supply, the mobility between the two sectors is very unlikely, since higher skills cannot be acquired at once. In the long run, however, part of the unskilled workers who are unable to find a job in the secondary sector might upgrade their professional skills, expanding the labor supply in the primary sector and reducing the wage gap in the secondary one. In fact, the introduction of the minimum wage had already contributed to diminishing the wage gap. From the labor demand perspective, the minimum wage raises the cost of the lower-skilled labor compared to the higher­skilled one, which could result in a rise in the labor demand and wages in the primary sector, with a possible widening of the wage gap. As a consequence, the minimum wage has an ambiguous impact on the wage inequality between the primary and the secondary sector. The increase of the minimum wage may generate effects not only on the lower-skilled workers, but on other categories of personnel that will be able to claim and obtain higher wages following collective bargaining, in order to maintain the wage differences justified by the level of training or length in service. These externalities are stronger in the case of wages that are closer to the minimum level, but tend to decline as the wages are higher compared to the minimum one. The increase of the minimum wage will generate the rise of the average wage to a greater extent if the externalities are more significant. If the wage increase that the group targeted by the minimum wage benefits from is higher than the one generated by externalities, the wage gap will diminish. Belman and Wolfson (2014) estimated that the increase in the minimum 8