firms active in this sector. We observe 4-digit NACE codes identifying the branch of the economy. Unfortunately, our data does not directly identify public-sector workers. However, official statistics indicate that only a small proportion of public employees fall into the category of minimum-wage earners.

**Nonetheless, employing the administrative tax datasets to examine employment and unemployment analysis encounters certain obstacles.** Firstly, the data is primarily intended for administrative purposes, such as computing social security contributions and worker benefit eligibility, rather than designed for research purposes. Secondly, there is no registered unemployed in the data. It differs from the unemployment definition employed in administrative tax datasets, even if it exists. It diverges from the standard set by the International Labour Office (ILO), as it does not contain the entire universe of unemployed (only those registered), and tracking of the unemployed is limited to the period during which they receive benefits. In Romania, the unemployed do not pay labor income tax and thus are absent in our dataset. Therefore, our analysis focuses on formal employment stocks and flows rather than unemployment.

**We exclude missing values from our analysis, as there is insufficient information to impute these values accurately.** The gross salary and working time information is missing or equal to zero for some workers. We cannot use such observations in our analysis, as the reasons for the missing variables are unknown. If there is a systemic bias in missing variables (e.g., gross salary information is often missing for low-income earners), our results may also be biased. The share of taxpayers included in the sample (observations with non-missing information on working hours and gross wages) varies between 72% and 87%.

**Our first task is to identify minimum wage workers in the tax administration data.** We identify minimum wage earners based on the value of the gross wage. As discussed above, in January 2020, three different minimum wage levels existed in Romania. We can directly identify construction sector employees entitled to the highest minimum wage (3,000 RON in 2020) because they are also entitled to special fiscal facilities and thus identified in our data by a special variable. The biggest shortcoming of our dataset is the need for more information on the education level to identify those with higher education. Therefore, we cannot distinguish between taxpayers entitled to a general minimum wage (2,230 RON in 2020) and employees with higher education entitled to a higher minimum wage (2,350 RON in 2020).

We categorize individuals as minimum wage earners in the sample according to the following criteria:

- If they are employed in the construction sector and their earnings fall within the range of 95% to 105% of the established minimum wage for construction sector employees (3,000 RON).

- If they are not employed within the construction sector, their earnings fall within 95% of the general minimum wage (2,230 RON) to 105% of the minimum wage applicable to higher-education employees (2,350 RON). Using the 105% threshold aligns with standard practices in minimum wage literature and

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