Minimum Wage and Unemployment in Russia: A New Look on an Old Construct

This file contains data files and do files to replicate the empirical results in the paper.In the paper, we investigate the unemployment effects of the minimum wage policy in Russia. Using region-level data, we show that a 1% increase in the minimum wage raises the unemployment rate among young workers by 0.05 percentage points but does not affect older workers. Additionally, we find that the minimum wage increases the share of the labor force employed informally. We corroborate these ndings by leveraging a sudden 63% increase in the minimum wage in Kamchatka in 2012 as a natural experiment. Importantly, we show that the magnitude of employment responses to minimum wage changes depends on the elasticity of capital-labor substitution, with stronger effects in industries where capital and labor can be substituted more easily. When capital-labor substitution is not feasible, employers respond to minimum wage increases by hiring workers informally. Finally, consistent with increased separations among young workers and informal recruitment, we find limited income effects of the policy.