Review Reports

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Thanks for inviting me to review the manuscript entitled "Between Benefits and Risks for Sustainable Economic Growth: Minimum Wage’s Impact on Youth Unemployment across Five CEE Countries". This manuscript examines the relationship between minimum wage adjustments and youth unemployment in five Central and Eastern European countries over 2010–2024, using a fixed-effects panel regression model. It integrates macroeconomic controls and social exclusion indicators and links findings to the UN Sustainable Development Goal. The core conclusion is a positive, statistically significant association between minimum wage increases and youth unemployment, with heterogeneity across countries. However, the manuscript requires substantial revisions to address gaps in theoretical integration, methodological transparency, empirical depth, and policy specificity.

(1) The current theoretical framework is overly general and fails to explicitly integrate institutional features unique to CEE labor markets—features that directly shape the minimum wage-youth unemployment relationship.

(2) The manuscript mentions CEE’s “low collective bargaining coverage” and “informal economies” but does not embed these into the theoretical discussion. Please add a sub-section in the literature review to synthesize, the reference is helpful, 10.1080/13504851.2021.1976378. Besides, do firms shift to informal hiring of youth when minimum wages rise, or does informality reduce formal youth employment further? Explicitly hypothesize how these CEE-specific institutions moderate the minimum wage effect.

(3) Three critical gaps undermine the credibility of results: omitted variable bias, endogeneity, and insufficient robustness checks. If minimum wage hikes push firms to hire youth informally, formal youth unemployment will rise, but the true effect on overall youth employment will be mismeasured. Please add “informal economy share % of GDP” as a control variable and re-estimate the fixed-effects model to discuss whether the minimum wage coefficient’s magnitude/significance changes.

(4) Minimum wage and youth unemployment may be endogenous since governments may freeze minimum wages during periods of high youth unemployment. The current model does not address this. Please adopt an IV approach, for example, lagged minimum wage (t-1, t-2) or EU Directive (EU) 2022/2041—use a dummy variable for post-2022 as an IV. Please report IV regression results and compare with fixed-effects results.

(5) The manuscript only validates fixed vs. random effects. Additional checks are needed to confirm result stability. Please replace the core variable by using “real minimum wage (EUR, deflated by national CPI)” instead of the nominal minimum wage, and exclude crisis periods. Moreover, please use random effects with the Mundlak correction and compare results.

(6) The manuscript’s country-specific discussion (Section 5.6) is descriptive but lacks empirical quantification of how institutional factors moderate the minimum wage effect. Please estimate an extended fixed-effects model with interaction terms: Minimum Wage × Social Dialogue Index, Minimum Wage × Active Labor Market Policy (ALMP) Spending (% of GDP). Present a supplementary table of interaction results and link them to country case studies.

(7) The manuscript links findings to SDG 8 but does not explicitly operationalize how minimum wage affects SDG 8.5 (decent work) and 8.6 (reduce NEET rates). Please add an analysis of how minimum wage affects “in-work poverty among youth”. Please estimate a separate regression with “NEET rate” as the dependent variable to test how minimum wages + ALMPs jointly reduce NEET rates. Please add a figure: “Minimum Wage Changes vs. SDG 8 Progress (2010–2024)” to visualize cross-country variation.

(8) Minor suggestions: Appendix A (Panel Dataset) has incomplete rows—standardize the table to ensure all cells are filled. The VIF table (Section 4) is incomplete—present a full table with all 5 independent variables and average VIF. Correct typos: “ing.NEETrateit” (Equation) → “NEETrateit”; “ration of the minimum wage to the median wage” (Section 5.6) → “ratio”. Use “real GDP per capita” (not “Capita GDP per”) in tables.

Author Response

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Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The manuscript investigates a relevant issue that is the effect of minimum wage on 4 Eastern European countries and uses a panel analysis for this.

The methodology in principle is appropriate, but I have some important concerns.

• The use of the NEET rate to explain the youth unemployment rate raises some problems: first, because the NEET rate contains the youth unemployment rate; second, because a problem of reverse causality can arise (NEET rates are affected by the levels of unemployment). Why did the authors not focus only on youth inactivity?
• The panel involves only 75 observations. It is not enough to have robust estimates
• Why consider the levels of minimum wage in nominal euros? The countries analysed have different levels of prices
• For the NEET rate, which is the age class considered?
• I would like to see the correlation matrix before the models’ estimates
• Lines: 381-385: it seems more a suggestion than an introduction to the results section
• Results from FE and RE are very different. The authors declare to have calculated the Hausman test, but it is not reported n Table 1
• In section 5, the authors provide a description for each country involved into the analysis. However, I expect that it is reported before, as this descriptive analysis is not linked to the results
• The conclusions are not strongly connected to the results.

Author Response

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Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The manuscript addresses an important and policy-relevant issue: the effects of minimum wage policies on youth unemployment across five CEE countries. The focus on sustainable economic growth and SDG 8 is timely, and the use of panel data methods adds value. However, while the paper has potential, in its current form it requires major revisions to improve both analytical rigor and clarity of contribution.

1. Although crises such as the financial crisis, COVID-19, and the war in Ukraine are mentioned, their effects are not properly modeled. Given their potential to bias results, the paper should incorporate dummy variables, interaction terms, or robustness checks to account for these shocks.
2. The lack of significance of labor productivity is briefly noted but insufficiently explained. Aggregate data may mask sector-specific youth employment effects.
3. Authors should either test alternative sectoral indicators (if available) or provide a much deeper discussion of the limitations of aggregate measures.
4. While five countries are studied, the conclusions remain overly generalized. The paper needs stronger differentiation across cases (e.g., why Poland’s outcomes differ from Romania’s).
5. The literature review is overly lengthy and at times unfocused. More important, it does not clearly identify the empirical gap that justifies the study. The authors should streamline the review and sharpen the research contribution.
6. The current discussion is too general. More concrete and differentiated recommendations are needed, linking empirical findings to specific country contexts.
7. Minimum wage levels may not be exogenous to youth unemployment; policymakers often adjust minimum wages in response to labor market conditions. This raises potential reverse causality. The paper should at least acknowledge this risk explicitly and, ideally, test for it. Instrumental variable approaches, lagged regressors, or system GMM would strengthen causal inference.
8. Other determinants of youth unemployment (education enrollment, migration flows, informality, active labor market policies) are omitted. The absence of these controls may bias the results. At minimum, the limitations should be acknowledged more explicitly.
9. Cross-country differences are not sufficiently highlighted. Results could be misleading if pooled averages mask important heterogeneity. Interaction terms or country-specific regressions could help.

Author Response

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Author Response File: Author Response.pdf

Reviewer 4 Report

Comments and Suggestions for Authors

Dear Authors, 

This is a very interesting and well-structured text. From a scholarly perspective, it is thorough and complete.

However, some limitations can be identified:
- The analysis relies solely on aggregated data at the country level, which masks regional and sectoral differences.
- The study period covers years strongly affected by crises (COVID-19, the war in Ukraine, the energy crisis), and the model does not introduce formal control variables for these events.

I my opinion the weakness is a certain 'one-side perspective" of the interpretation: although the potential benefits of the minimum wage are mentioned (e.g. reduction of inequality), the empirical part does not test them directly – the entire analysis focuses on unemployment.

This interesting text could be improved. A minor addition would significantly increase its value:

1) Accounting for the impact of external economic shocks – I suggest considering introducing additional control variables (e.g., the COVID-19 pandemic, the energy crisis, the war in Ukraine), which had a strong impact on labor markets during the period under review. Their omission may distort the econometric results.
2) If available, it is worth expanding the analysis to include regional and sectoral dimensions. Data at the national level is highly aggregated. Accounting for regional differences (e.g., west-east development in a given country) or sectoral differences (e.g., services, industry) would allow for a better understanding of how the minimum wage affects young people in various labor market segments.
3) A balanced assessment of the costs and benefits of the minimum wage is warranted.
– The article heavily emphasizes the negative effects (increased youth unemployment) and less emphasizes the potential positive effects (e.g., poverty reduction, improved social cohesion, long-term productivity effects). It is worth emphasising both sides more strongly to present a more complete picture of minimum wage policy.

Author Response

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Author Response File: Author Response.pdf

Reviewer 5 Report

Comments and Suggestions for Authors

The article addresses a timely and important topic, namely the tension between minimum wage policies and youth unemployment within the framework of the Sustainable Development Goals.

However, certain sections, such as the literature review and the discussion, could be improved, as they are somewhat descriptive and repetitive.

Labor productivity’s insignificance is acknowledged but not explored deeply enough. Please expand the discussion of the results.

Overall, the paper is well-structured and represents a valuable opportunity for publication in the Sustainability journal.

Author Response

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Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

The authors have justified the aspects not enough clear highlighted by the reviewer and, in (few) some cases improved clarity. As the authors have acknowledged the limits of this research, the article can be published in this revised form

Author Response

Comment 1: The authors have justified the aspects not enough clear highlighted by the reviewer and, in (few) some cases improved clarity. As the authors have acknowledged the limits of this research, the article can be published in this revised form.

Response 1: We deeply appreciate your thoughtful and positive evaluation, as well as your constructive feedback. We are glad that the revisions have addressed the points raised and that you recommend the article for publication. We truly appreciate your valuable comments, which have helped us improve the clarity and quality of the manuscript.

Reviewer 3 Report

Comments and Suggestions for Authors

The authors have made significant improvements to their manuscript. The revised version demonstrates a clearer structure, a more coherent link between the empirical results and policy implications, and a substantial expansion of the theoretical discussion connecting minimum wage policies with sustainable development. The addition of robustness checks and country-specific analyses has also improved the depth of interpretation.

Nevertheless, some key concerns remain, primarily regarding methodological rigor and the precision of certain arguments. Before the paper can be accepted, I recommend that the authors address the following points.

1. The fixed-effects model is now better justified; however, the authors should clarify whether the potential endogeneity between minimum wage and unemployment has been tested. A short discussion acknowledging this limitation would suffice if such analysis was not feasible.
2. The choice of nominal minimum wage (EUR) should still be reconsidered. Since the study covers 2010–2024, inflation and exchange rate variations are substantial.
3. The revised discussion is richer, but the link between the empirical findings and sustainability goals remains somewhat implicit.
4. The explanation of the “productivity paradox” is interesting but somewhat speculative. Please ground this in citations to previous CEE studies that faced similar findings.
5. When discussing national cases, please ensure that the link to the econometric evidence remains explicit.
6. The writing is much improved, though a few long sentences still affect readability. A final language editing pass for conciseness and clarity would be advisable.
7. Verify reference formatting according to Sustainability style.
8. Table and figure captions should be self-contained and include the data source.

Author Response

Please see the attachment.

Author Response File: Author Response.docx

Round 3

Reviewer 3 Report

Comments and Suggestions for Authors

After careful consideration of the manuscript, as well as reviewing the revisions provided by the authors, I am satisfied that the concerns raised have been adequately addressed. I am therefore happy to recommend the manuscript for publication in its current form.