The Effect of Minimum Wage on Iran's Macroeconomic Variables in The Framework of a Dynamic Stochastic General Equilibrium Model

In this paper ,in order to investigate the economic effects of the minimum wage policy on macroeconomic variables in the framework of the new Keynesian theory, a dynamic stochastic equilibrium general (DSGE) model has been simulated and estimated for an open and small oil exporter economy conforming with the structure of Iran's economy in the range from 1370 to 1395 .In the above mentioned model, nominal rigidity (wages and prices) and consumer habits are considered to be in line with the economic condition  of the country, the labor market is classified in to sectors of unskilled and skilled labor. The main purpose of this study is to find an answer determining the annual minimum wage based on the CPI mechanism, in which the economy is exposed to supply demand shocks and monetary and financial policies, impacts on the macroeconomic variables, namely GDP, inflation, employment and total wage growth. The results of the simulation and estimation of this model, which show that the simulated data torques are consistent with real-world are based data based on calibration, show that by an increase in the minimum wage can contribute to not only a rise in inflation and total wage level, but also a fall in GPD, consumption &investment in the short time.