Oyvat, Cem ORCID: https://orcid.org/0000-0002-5097-0246, Elgin, Ceyhun and Elveren, Adem Yavuz (2026) Minimum wages in a high-inflation economy: the case of Türkiye. Structural Change and Economic Dynamics. ISSN 0954-349X (Print), 1873-6017 (Online) (doi:10.1016/j.strueco.2026.09.008)

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Abstract

Drawing on a Post-Keynesian framework, this paper examines the impact of minimum wage increases on inflation, unemployment rate, demand, and the trade balance in Türkiye, a country characterized by persistent high inflation. Using monthly data from 2005 to 2024 and Structural Vector Autoregression (SVAR) models, we analyze the relationships between minimum wage adjustments, consumer prices, unemployment, capacity utilization, and trade balance. Our findings indicate that a 10% increase in the minimum wage raises annual inflation by 1.0-2.0 percentage points. This inflationary effect is primarily driven by the cost channel, as opposed to the demand channel. The analysis finds no significant evidence that minimum wage increases influence demand-side factors such as capacity utilization, industrial growth, or retail sales. The impact on unemployment is minimal —0.10 to 0.15 percentage points. Moreover, a 10% rise in the minimum wage generates an extra trade deficit amounting to 0.11–0.27% of GDP.

Item Type:	Article
Uncontrolled Keywords:	minimum wage, inflation, unemployment, Post-Keynesian economics, Türkiye
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics
Related URLs:	https://authors.elsevier.com/sd/article/...
Last Modified:	23 Sep 2026 08:41
URI:	https://gala.gre.ac.uk/id/eprint/54423

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