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The impact of the minimum wage on Spanish youth: Evidence from a natural experiment

Author

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  • Antón, José-Ignacio
  • Muñoz de Bustillo, Rafael

Abstract

This work assesses the impact of the minimum wage on youth employment, unemployment and education enrolment in Spain. Using a difference-in-differences approach, we take advantage of the fact that the minimum wage for people aged 16 and 17 years old, which was approximately two thirds the level of the standard minimum wage, was raised to reach full convergence with the latter in a period of three years (from 1995 to 1998). The empirical analysis suggests that this policy intervention depressed the employment levels of the affected group, raised unemployment among them and decreased the probability of remaining in formal education.

Suggested Citation

  • Antón, José-Ignacio & Muñoz de Bustillo, Rafael, 2011. "The impact of the minimum wage on Spanish youth: Evidence from a natural experiment," MPRA Paper 33488, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33488
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    File URL: https://mpra.ub.uni-muenchen.de/33488/1/MPRA_paper_33488.pdf
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    References listed on IDEAS

    as
    1. Hyslop, Dean & Stillman, Steven, 2007. "Youth minimum wage reform and the labour market in New Zealand," Labour Economics, Elsevier, vol. 14(2), pages 201-230, April.
    2. Pereira, Sonia C., 2003. "The impact of minimum wages on youth employment in Portugal," European Economic Review, Elsevier, vol. 47(2), pages 229-244, April.
    3. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
    4. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    5. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    6. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
    7. Glenda Quintini & Sébastien Martin, 2006. "Starting Well or Losing their Way?: The Position of Youth in the Labour Market in OECD Countries," OECD Social, Employment and Migration Working Papers 39, OECD Publishing.
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    Cited by:

    1. Aida Caldera Sánchez & Alain de Serres & Naomitsu Yashiro, 2017. "Reforming in a Difficult Macroeconomic Context: A Review of Issues and Recent Literature," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-41, February.
    2. Gerhard Reinecke & Damian Grimshaw, 2015. "Labour market inequality between youth and adults: a special case?," Chapters, in: Janine Berg (ed.), Labour Markets, Institutions and Inequality, chapter 14, pages 361-398, Edward Elgar Publishing.
    3. Janine Berg (ed.), 2015. "Labour Markets, Institutions and Inequality," Books, Edward Elgar Publishing, number 16143.

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    More about this item

    Keywords

    minimum wage; Spain; difference-in-differences; employment;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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