New CEPR evidence synthesis challenges the standard objection to minimum wage reform in countries like Georgia.
The Centre for Economic Policy Research published a comprehensive evidence synthesis in July 2026 on the employment effects of minimum wage increases in middle-income countries, covering 47 natural experiments across 23 countries over the period 2000–2024. The synthesis — authored by researchers from the IZA Institute of Labour Economics and the London School of Economics — directly addresses one of the most frequently cited objections to minimum wage reform in countries like Georgia: the argument that raising the minimum wage will cause significant job losses, particularly among low-skilled workers.
The CEPR synthesis finds that minimum wage increases in the range of 10–30 percent of the current average wage — which corresponds broadly to the scale of reform that would be involved in moving Georgia’s minimum wage from GEL 20 to GEL 700 — produce employment effects that are small and statistically indistinguishable from zero in the majority of cases. The employment effects are most negative in high-formality economies where the minimum wage binds on a significant share of the workforce, and most neutral or positive in lower-income, higher-informality economies where the minimum wage increase primarily affects the boundary between informal and formal employment — potentially drawing informal workers into formal employment rather than displacing formal workers into unemployment.
Georgia’s profile — high informality, low current minimum wage relative to average earnings, labour market characterised by monopsonistic wage-setting in many sectors — most closely resembles the cases in the synthesis where minimum wage increases had neutral or modestly positive employment effects. The synthesis notes that the channel through which minimum wage increases reduce employment (by raising labour costs above productivity in perfectly competitive markets) is weakest when wage-setting is not perfectly competitive — which is the normal condition in labour markets with significant informality and geographic concentration of employers.
The synthesis also reviews evidence on the wage spillover effects of minimum wage reform — the extent to which increases in the statutory floor raise wages for workers above the minimum. In middle-income countries, wage spillovers are typically positive for 15–25 percent of the wage distribution, meaning that minimum wage reform raises wages not only at the bottom but across a significant portion of the lower-middle income range. In the Georgian context, this would correspond to workers earning between GEL 700 and GEL 1,100 per month.
GILS Note: This evidence synthesis is directly relevant to the debate on Georgia’s minimum wage. The most common objection to reform — that significant job losses will follow — is not supported by the international evidence for countries in Georgia’s structural position. For the full GILS analysis of minimum wage options and their implications for the Georgian labour market, see the Living Wage page.
Read the full GILS analysis: https://labour.edu.ge/living-wage-georgia/