SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS influenced by the increase in the minimum wage, if this decision results in a rise in prices and a decline in profits. The harsher the competition, including the international one, the more will companies seek for mechanisms, other than the price rise, to adjust the shock induced by the minimum wage. However, for companies active in the sectors of non­tradable goods, the transfer of the minimum wage to prices will be more significant. Lemos(2008) showed that the transfer of the minimum wage to prices in USA was low, while Harasztosi et al.(2015) found the opposite in Hungary, with profits that maintained their previous levels. Sorkin(2015) demonstrated that, in the long run, the companies adjusted the rising wage costs by higher prices rather than by reducing employment. In general, the adjustment through prices is easier in the sectors with an inelastic demand to prices, because the rise in prices results in higher receipts, with no negative impact on employment. The emerging economies in Europe are more exposed to an erosion of external competitiveness as a consequence of the minimum wage increase, as they have a relatively larger share of labor-intensive exports and a larger share of wage costs, and of a higher rise in wages(including the minimum one) compared to productivity. Rahman et al.(2015) included the minimum wage among the factors that influence exports in the economies of Cerntral and Eastern Europe, along with the global distribution channels, the quality of the human resources and the business environment conditions. Review of the literature on the effects of minimum wage increase in Romania Only a limited number of empirical studies exist on the adjustment of the micro- and macroeconomic impact of the minimum wage in Romania, in spite of the significant percentage of employees who are paid the minimum wage. The topic has become increasingly relevant with the frequent changes in the minimum wage level and the periods for which relevant information is available have extended. Moreover, the literature expanded with an analysis of the microeconomic effects of the minimum wage, as well as with the inclusion of Romania in the comparative analyses made by international institutions, e.g. the IMF. Thus, Aparaschivei et al.(2011) used a two-stage least squares(TSLS) model to demonstrate that the actual minimum wage has a negative and statistically significant impact on employment and the active population in all age groups, with the highest impact on the population aged 15 to 19. Andreica et al.(2010) estimated that the employment response to the increase of the minimum wage is not uniform, but is rather gradually adjusted depending on the planned wage funds. Thus, the increase of the minimum wage determines an expansion of employment after the first quarter, due to the incentives for hiring persons who are looking for a job, followed by two negative corrections 9 and 12 months after the initial shock, generated by the decisions of the companies facing the rise of wage costs. From 1999 to 2009, a 1% rise in the minimum wage increase rate led to a decline by 0.14% in the rate of increase of the gross average wage after one year. Antonie et al.(2010) demonstrated that the minimum wage has a positive influence on the correlation between the hourly productivity of labor and the hourly remuneration of the employees. Enache(2012) estimated that the national-level increase in the average wage is followed by an actual rise in the minimum wage and unemployment benefits, although relatively low. The National Bank of Romania(2015) conducted a statistical research on the behavior of companies in the labor market as a result of successive minimum wage increases and reached the following basic conclusions: The increase of the minimum wage generated only a limited rise in the gross average wage, as part of the companies also increased the wages of certain categories of employees that earned more than the minimum wage. 10