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Does Minimum Wage Cause Inflation?

This paper reviews the relationship between inflation rate and minimum wage in Iranʹs economy over the 1969-2005. According to the economic literature, there is a narrow relationship between inflation rate and minimum wage. Some economists believe in increased inflation due to minimum wage. The other group of economists considers the increased inflation as a cause for increasing minimum wage. The study results do confirm the existence of causal relationship from inflation rate to minimum wage. JEL Classification. E24, E31, J31.