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Minimum wages: do they really hurt young people?

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Author Info

  • Sofía Galán

    () (Banco de España)

  • Sergio Puente

    () (Banco de España)

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    Abstract

    We estimate the effects of a significant increase in the minimum wage in Spain between 2004 and 2010 on the individual probability of losing employment, using a large panel of social security records. Our main finding is that older people experienced the largest increase in the probability of losing their job, when compared with other age groups, including young people. The intuition is simple: among the affected (low-productivity) workers, young people are expected to increase their productivity more than older ones, who are in the flat part of their life-cycle productivity curve. Consequently, an employer facing a uniform increase in the minimum wage may find it profitable to retain young employees and to fire older ones

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    File URL: http://www.bde.es/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/12/Fich/dt1237e.pdf
    File Function: First version, October 2012
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    Bibliographic Info

    Paper provided by Banco de España in its series Banco de España Working Papers with number 1237.

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    Length: 30 pages
    Date of creation: Oct 2012
    Date of revision:
    Handle: RePEc:bde:wpaper:1237

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    Related research

    Keywords: Minimum wage; labour demand; firing;

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Minimum wage increases hurt the old, not the young
      by Economic Logician in Economic Logic on 2012-11-23 15:34:00
    2. [??]??????????????????????
      by himaginary in himaginaryの日記 on 2012-12-09 08:00:00

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