directly impacted by a $15 minimum wage in the United States live in poor families.

Across LMICs, the antipoverty effect of the minimum wage is not obvious either. Those in the poorest households might not be the ones benefiting from the minimum wage rise, or might suffer employment losses (Gindling, 2018; Betcherman, 2012a). In the Philippines, Sy and Hosoe (2022) find that the minimum wage raises household inequality due to some of those affected leaving the country and sending back remittances, with further macroeconomic consequences (appreciation of the currency, loss of jobs in the tradable sector, etc.). There is evidence that the minimum wage also reduces crime rates. Braun (2019) finds minimum wage increases lead to a crime reduction among young individuals in the US.

The impacts of minimum wages on living standards, productivity and social cohesion are summarized in Table 3.

# **4.3 Employment Protection Legislation**

Employment protection legislation regulates the initiation and termination of employment.<sup>1516</sup> More specifically, it sets which employment contracts are permitted and the conditions under which they can be used. It also determines the conditions under which employment can be terminated and the procedures to be used in termination (advanced notice, severance payments, special requirements for collective dismissals, etc.).

Employment protection legislation refers to all types of employment protection measures, originated by legislation, court rulings, collectively bargained conditions of employment or customary practice. These provisions are enforced through the worker’s right to appeal against termination.

There are efficiency considerations of too much or too little employment protection. The optimal scale of employment protection policies balances firms’ needs—for flexibility to adjust their labor force to deal with demand shocks, technology shocks, and cost changes—with workers’ living standards and need for stable jobs and incomes. New digital technologies behind the ”gig economy” may enhance firms’ demand for flexibility, but they also impose new challenges for employment protection legislation, including how to protect gig workers along with whose tasks may be replaced by digital technologies (Almeida et al., 2018).

The nature of these restrictions is quite similar in all countries, but the actual processes and the overall degree of stringency vary considerably.<sup>1718</sup> While the US, New Zealand, Canada, the UK, and Hungary have fairly unrestrictive individual dismissal regulations (the US being the least restrictive); regulations in the Czechia, Portugal, France, the Netherlands, and Germany are far

> 15The terms “employment protection rules” or “job protection legislation” are used synonymously.

> 16Legislation about fair labor conditions might also be considered to fall under the umbrella of employment protection legislation. For instance, Abman et al. (2023) and Lakdawala et al. (2023) study the effects of implementing and expanding workers’ rights to child workers. However, legislation around fair labor conditions, including child labor conditions, falls outside the scope of our review.

> 17See the OECD indexes for reference.

> 18While some aspects of employment protection rules, like the length of advance notices and the dimension of severance payments, can be measured with precision, other important features, such as the willingness of labor courts to entertain appeals by fired workers and how judges interpret what is a “just cause” for termination, are much more difficult to quantify.

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