SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS wage in USA expanded the income of the target group, i.e. of the employees who earned slightly more than the minimum wage prior to the increase. Grimshaw et al.(2014) estimated that, when the minimum wage is taken as a basis for collective bargaining(e.g. in France), strong externalities are present to an average wage that is up to 10% higher than the minimum one, but extend up to wages that are twice as high as the minimum one. Conversely, in USA and UK, which are economies with low trade union power, the minimum wage either determines lower externalities for other categories of employees or generates a decline in the income of the employees that earned slightly above the minimum level. A microeconomic research conducted by CEB(2015) showed that, in the analyzed European countries, there was a positive correlation between the minimum wage and the average one and 20% of companies also raised the wages that were previously higher than the minimum. Based on a meta-analysis of the studies concerning the impact of the introduction of the minimum wage, Neumark and Wascher(2008) concluded that the minimum wage is not an appropriate instrument in point of social policy, since it diminishes the employment opportunities for persons with lower skills and lowers the income of their families, generating a higher risk of poverty for them. In fact, the decision to increase the minimum wage does not automatically lead to a reduction in poverty and social inequality and complementary measures are required, e.g. lower taxation of lower wages and stimulation of lower-wage workers' participation in training programs to upgrade their professional skills. The minimum wage can have a direct impact on income inequality only if the wages are index-linked to it, as demonstrated by Maloney and Mendez (2004) for the countries in South America. Otherwise, the income inequality is influenced not only by the wage differences, but by the capital and wealth income, progressiveness of taxation and social transfer expenditures. However, compared to the latter factors mentioned, the minimum wage is not a costly instrument for the budget. The author et al.(2014) estimated a positive impact of the minimum wage on the distribution of income, due to the influence on the lower segment of income distribution. The emerging and relatively less developed economies in Europe experience relatively greater income inequality, as a result of the polarizing tendency of economic activities, low employment rates, significant informal sector and the relatively lower share of the social welfare expenditure. According to IMF(2016a), the increase in the minimum wage is linked to the inequality of lower income only in Poland, Romania and Slovakia. In countries like Latvia, Hungary or Poland, the distribution of income has not changed significantly, although the ratio of the wages in the tenth decile to those in the first one decreased and the share of the minimum wage in the average one expanded. According to IMF(2016a), the distribution of wages in Romania is relatively similar to that of income, but the increase in the minimum wage does not generate a rise in income for all of the poorest households, since they are composed of inactive, retired or unemployed persons. As regards poverty, it is estimated that the minimum wage does not have a statistically significant impact on it in the emerging economies of Europe. Relationship between minimum wage, inflation and competitiveness From a social perspective, the minimum wage is a useful instrument for improving the living standard and social equity, but it puts additional pressure on companies for reasons related to the correlation with productivity, competitiveness and employment. Regarding the impact of the minimum wage on inflation, Andreica et al.(2010) estimated that it was a negative one, although very low, one year after the initial shock. The economic competitiveness of companies can be negatively 9