Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam

Nguyen, Cuong (2011): Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam. Published in: ASEAN Economic Bulletin , Vol. 28, No. 3 (15 December 2011)

Abstract

It is often argued that minimum wage increases can lead to increased inflation. This paper examines the impact of minimum wage increases on inflation in Vietnam during the 1994-2008 period. Inflation is measured by a monthly overall Consumer Price Index (CPI) and a monthly food CPI. It is found that the minimum wage increases did not increase inflation. Since the minimum wage increases often took place one or two months before the Vietnamese New Year festivals, observed increases in monthly inflation after the minimum wage increases were caused by increased consumption demand during the New Year festivals, not by the minimum wage increases.

• Item Type: MPRA Paper
• Language: English
• Keywords: Minimum wages, inflation, CPI, Vietnam
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand

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