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Employment effects of the minimum wage: evidence from the Spanish 2019 reform

Author

Listed:
  • Lucía Gorjón

    (Fundación ISEAK)

  • David Martinez de Lafuente

    (Fundación ISEAK)

  • Gonzalo Romero

    (Fundación ISEAK)

Abstract

We examine the employment effects of the 2019 minimum wage increase in Spain on individual probabilities of losing employment status (extensive margin) and lowering work intensity (intensive margin). To do so, we use variation of workers’ exposure to the reform by comparing monthly employment transitions into unemployment and reductions in number of working hours between employees earning less than the minimum wage (treatment group) and those earning more and that should therefore be unaffected by the reform (control group). We find that the new minimum wage significantly increased the probability of experiencing unemployment (1.7 percentage points) and a reduction in work intensity (0.9 percentage points) for treated workers after one year. Our results suggest substantial heterogeneity by age, prior work intensity, economic sector and geographical region of employees affected by the reform.

Suggested Citation

  • Lucía Gorjón & David Martinez de Lafuente & Gonzalo Romero, 2024. "Employment effects of the minimum wage: evidence from the Spanish 2019 reform," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 15(1), pages 1-55, March.
    • Handle: RePEc:spr:series:v:15:y:2024:i:1:d:10.1007_s13209-023-00291-1
    DOI: 10.1007/s13209-023-00291-1
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    More about this item

    Keywords

    Minimum wage; Employment effects; Matching; Work intensity;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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