The effect of increasing the minimum wage on economic welfare using systems dynamics

In this paper, the minimum wage for economic welfare is simulated using a system dynamics model in Vensim software. This has been used as a research innovation due to its high determination and applicability in complex models and analysis of system behavior over time. Economic data have been collected from reliable domestic sources including the Central Bank, the Statistical Center of Iran, and the databases of the Ministry of Cooperatives, Labor and Social Welfare. The reliable model can be seen from the comparison of three modes (۱- Reference mode of key changes trend by real data from ۲۰۰۱ to ۲۰۲۱ ۲- Current simulation mode from ۲۰۰۶ to ۲۰۲۱ ۳- Future forecast from ۲۰۲۱ to ۲۰۳۱). Then, by running the scenario for changing the tax rate from ۸% to ۱۰% and ۱۲%, it was shown that increasing the rate in exchange for budget reduction, inflation reduction, control of the minimum wage and, as a result, better economic growth. The ۱۲% tax rate provided the best results, as the deficit fell to almost zero and the economy reached its highest level.

Keywords:

Minimum Wage , Economic Welfare , System Dynamics , Vensim Software , Tax Rate