activities) (IMF, 2020). Thus, it is not necessarily the case that those remunerated at the minimum wage are at risk of poverty, as they may be students or individuals with secondary incomes from relatively affluent households. An analysis conducted by the OECD (1998) covering nine developed countries concludes that most low-wage workers (between 60% and 90%) earning less than two-thirds of the median wage live in households with medium or high incomes. Only 10% of them live in poor households, limiting the effectiveness of this instrument in reducing the poverty rate overall. On the other hand, the beneficial impact of increasing the minimum wage on poverty among employed individuals may be eroded by possible indirect effects of the minimum wage increase (such as increased unemployment rate, loss of purchasing power due to intensified inflationary pressures, loss of specific social benefits - means-tested benefits).

**Many studies have shown that poor individuals are not necessarily active in the labor market in general (Freeman, 1996; Belman and Wolfson, 2014; IMF, 2016; 2020).** An IMF (2020) analysis based on the elements of the EU Directive on adequate minimum wages underlines that raising the minimum wage to 60% of the median wage or 50% of the average wage would lead to a reduction in poverty among employed individuals. Still, it would have a limited impact on the overall poverty rate, given that many of the poorest households are not active in the labor market. Thus, not all poor households have adult members who work and are remunerated at the minimum wage level, especially considering that household members at risk of poverty may be pensioners (as is frequently the case in Greece), unemployed, or out of the labor force (especially in Romania and Hungary). Recent findings for Romania (Militaru et al., 2019) indicate that the minimum wage contributed to a reduction in income inequality. The income inequality following the minimum wage hikes in 2014 was lower than it would have been in the hypothetical scenario of no increase, even though the analysis did not account for potential disemployment effects. IMF (2016) also emphasizes that the minimum wage policy has contributed to reducing income inequalities in Romania, influencing the lower part of the wage distribution. On the other hand, the increase in the minimum wage seems to have only a limited impact as it does not generate income growth for the poorest households, which are generally composed of inactive individuals, pensioners, unemployed individuals, or those engaged in another form of occupation. Therefore, the minimum wage policy needs to be synchronized with other social policies to address poverty-related issues.

**The minimum wage could retain its efficacy as a tool for diminishing poverty if the beneficiaries of the minimum wage policy are disproportionately drawn from low-income households.** While research in the United States indicates that minimum wages might not effectively uplift the poor (Neumark et al., 2005; MaCurdy, 2015), findings from developing countries yield a mixed perspective (Bell, 1997; Del Carpio, Messina, and Sanz-de-Galdeano, 2014; Gindling and Terrell, 2007 and 2009; Maloney and Nunez, 2000, Del Carpio, 2019). Ultimately, the impact of minimum wage policies on poverty alleviation hinges on contextual factors and the attributes of the workers affected by these wages. Therefore, a comprehensive exploration of the potential

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