# <mark>Alternative policies</mark>

**We also consider alternative scenarios of minimum wage increase in addition to the 250 euros that were envisioned by policy makers:** (a) 230 euros; (b) 212 euros (minimum living wage); (c) 180 euros for those 35 years and older and 137.6 euros for those younger than 35 (a current rule-based minimum wage increase accounting for core inflation and private sector wage growth); (d) 193.6 euros (equivalent to 50 percent of the median wage). Overall, the anticipated effect of these alternative scenarios (with the exception of 230 euros) on both employment and earnings are relatively small (Table 7). For the young (aged 15-24), unemployment is simulated to increase by 0.26 (0.37) percentage points in the short term (long term) with a uniform increase of the minimum wage to 212 euros (minimum living wage) and by 0.14 (0.2) percentage point in the short term (long term) with a uniform increase to 193.6 euros (equivalent to 50 percent of the median wage). With a rule-based minimum wage increase accounting for core inflation and private sector wage growth, the effect on unemployment is not significant, as well as the overall effect on earnings because in this share only a very small share of workers would be affected (0.22 percent). In the long term, none of the policies considered is expected to have a significant overall effect on earnings.

**Table 7. Ex-Ante Evaluation of the Impact of Minimum Wages: Alternative Policies**

||No<br>policy|230 Eur<br>Gro|os 2018<br>ss<br>|212 Eu<br>Gr<br>|ros 2018<br>oss<br>|180 (137<br>2018 Gro<br>(34-) y <br>|.6) Euros<br>ss for 35+<br>ear olds<br>|50% of<br>Wage (19<br>Gr<br>|Median<br>3.6 Euros<br>oss)<br>|
|---|---|---|---|---|---|---|---|---|---|
|||Short-run|Long-<br>run|Short-<br>run|Long-<br>run|Short-<br>run|Long-<br>run|Short-<br>run|Long-<br>run|
|Employment<br>rate, %|28.80|28.72|28.68|28.76|28.74|28.80|28.80|28.78|28.77|
|||[28.69; 28.74]|[28.65;28.70]|[28.74;28.77]|[28.72;28.76]|[28.80;28.80]|[28.80;28.80]|[28.77;28.79]|[28,76;28,79]|
|Unemployment||||||||||
|rate, %|29.59|29.80|29.90|29.70|29.75|29.59|29.60|29.64|29.67|
|||[29.75;29.86]|[29.84;29.97]|[29.67;29.75]|[29.71;29.81]|[29.59;29.60]|[29.59;29.60]|[29.62;29.68]|[29,63;29,70]|
|Youth||||||||||
|unemployment<br>rate, %|55.41|55.85|56.07|55.67|55.79|55.41|55.41|55.55|55.61|
|||[55.69;56.07]|[55.84;56.32]|[55.55;55.84]|[55.64;55.99]|[55.41;55.41]|[55.41;55.41]|[55.45;55.65]|[55,49;55,74]|
|Share of youth<br>NEETs, %|30.11|30.23|30.27|30.19|30.21|30.15|30.15|30.17|30.18|
|||[30.19;30.27]|[30.22;30.31]|[30.17;30.23]|[30.18;30.25]|[30.15;30.15]|[30.15;30.15]|[30.15;30.19]|[30,16;30,21]|
|Change in real<br>earnings, %||0.12|0.02|0.06|0.01|0.00|0.00|0.02|0.00|
|_Note: Kosovo_|_LFS 2018_|[0.06;0.18]<br>_is used. Wage_|[-0.06;0.08]<br>_imputation is_|[0.01;0.09]<br>_described in S_|[-0.05;0.05]<br>_ection 2. Short_|[-0.01;0.00]<br>_- (long-) run_|[-0.01;0.00]<br>_labor demand_|[-0.01;0.05]<br>_elasticity value_|[-0,03;0,04]<br>_is set at -_|

_Note: Kosovo LFS 2018 is used. Wage imputation is described in Section 2. Short- (long-) run labor demand elasticity value is set at - 0.5 (-0.8) for skilled labor and -0.7 (-1) for unskilled labor. Only employees with wages between the old and the proposed minimum wage are assumed to be affected. Aged 15-64. Confidence intervals are in brackets._ 31