IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v98y2026ics0927537125001502.html

Minimum wages in a dual labor market: Evidence from the 2019 minimum-wage hike in Spain

Author

Listed:
  • Hijzen, Alexander
  • Montenegro, Mateo
  • Pessoa, Ana Sofia

Abstract

This paper provides an assessment of the 2019 minimum-wage hike in Spain, which increased the minimum wage by 22 % and directly concerned 7 % of dependent employees. We make use of two complementary approaches, one that follows incumbent workers over time and hence does not take account of any possible effects on new hires, and one that tracks employment in wage bins over time and takes account of both separations and new hires. The results are as follows. First, the minimum wage hike significantly increased the wages of directly affected workers, with small positive wage spillovers on workers with initial wages just about the new minimum wage. Second, the increase in wages comes at the expense of a reduction in low-wage employment. While employment increases just above the minimum wage, it is not sufficient to offset the decline in employment below it. Third, the reduction in employment is mainly driven by a reduction in hires of workers on open-ended contracts and to a smaller extent job losses among workers on fixed-term contracts. This illustrates that limiting the study of minimum wage hikes to stayers can dampen the estimated impact on employment.

Suggested Citation

  • Hijzen, Alexander & Montenegro, Mateo & Pessoa, Ana Sofia, 2026. "Minimum wages in a dual labor market: Evidence from the 2019 minimum-wage hike in Spain," Labour Economics, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:labeco:v:98:y:2026:i:c:s0927537125001502
    DOI: 10.1016/j.labeco.2025.102826
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537125001502
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.labeco.2025.102826?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Galán Sofía & Puente Sergio, 2015. "Minimum Wages: Do They Really Hurt Young People?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(1), pages 299-328, January.
    2. Alan Manning, 2021. "The Elusive Employment Effect of the Minimum Wage," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 3-26, Winter.
    3. John J. Horton, 2025. "Price Floors and Employer Preferences: Evidence from a Minimum Wage Experiment," American Economic Review, American Economic Association, vol. 115(1), pages 117-146, January.
    4. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    5. Samuel Bentolila & Juan Dolado & Juan Jimeno, 2012. "Reforming an insider-outsider labor market: the Spanish experience," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-29, December.
    6. Megan Linde Leonard & T. D. Stanley & Hristos Doucouliagos, 2014. "Does the UK Minimum Wage Reduce Employment? A Meta-Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 499-520, September.
    7. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    8. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    9. Seamus McGuinness & Paul Redmond, 2019. "The Impact of a Minimum‐Wage Increase on Temporary‐Contract Workers," Fiscal Studies, John Wiley & Sons, vol. 40(2), pages 149-173, June.
    10. Jorge Casanova & David Catalán & Florentino Felgueroso & Marcel Jansen, 2025. "Firm-Level Employment Dynamics and Minimum Wages: Evidence from Spain," Studies on the Spanish Economy eee2025-10, FEDEA.
    11. Peter Harasztosi & Attila Lindner, 2019. "Who Pays for the Minimum Wage?," American Economic Review, American Economic Association, vol. 109(8), pages 2693-2727, August.
    12. Gregory, Terry & Zierahn, Ulrich, 2022. "When the minimum wage really bites hard: The negative spillover effect on high-skilled workers," Journal of Public Economics, Elsevier, vol. 206(C).
    13. Clemens, Jeffrey & Wither, Michael, 2019. "The minimum wage and the Great Recession: Evidence of effects on the employment and income trajectories of low-skilled workers," Journal of Public Economics, Elsevier, vol. 170(C), pages 53-67.
    14. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garcia-Louzao, Jose & Tarasonis, Linas, 2023. "Wage and Employment Impact of Minimum Wage: Evidence from Lithuania," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 592-609.
    2. Arindrajit Dube & Attila Lindner, 2024. "Minimum Wages in the 21st Century," RFBerlin Discussion Paper Series 2425, ROCKWOOL Foundation Berlin (RFBerlin).
    3. Balázs Égert & Jarmila Botev & David Turner, 2026. "Minimum wages at a turning point?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 68(2), pages 1-35, June.
    4. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2024. "Long-term responses to large minimum wage shocks: Subminimum and super-minimum workers in Slovenia," Economic Systems, Elsevier, vol. 48(4).
    5. Hayato Kanayama & Sho Miyaji & Suguru Otani, 2025. "Just After Minimum Wage Hikes: Short-Run Labor-Demand Response and Reallocation," Papers 2505.04555, arXiv.org, revised Mar 2026.
    6. Medrano-Adán, Luis & Salas-Fumás, Vicente, 2023. "Do minimum wages deliver what they promise? Effects of minimum wage on employment, output, and income inequality from occupational choice theory," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 366-383.
    7. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta's Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    8. Stelios Roupakias, 2025. "Employment and Distributional Effects of Greece's National Minimum Wage," LABOUR, CEIS, vol. 39(1), pages 43-60, March.
    9. Kunaschk, Max, 2024. "The effects of minimum wages on employment and prices—Evidence from the hairdressing sector," Labour Economics, Elsevier, vol. 88(C).
    10. Rémi Bazillier & María Moraga-Fernández, 2025. "Minimum Wage Shocks, Firms and Employment Evidence from Africa," Documents de travail du Centre d'Economie de la Sorbonne 25006, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    11. Kim, Jiyoon & Levere, Michael & Magenheim, Ellen, 2025. "Do minimum wage increases induce changes in work behavior for people with disabilities? Evidence from the AbilityOne program," Labour Economics, Elsevier, vol. 92(C).
    12. repec:ces:ceswps:_11586 is not listed on IDEAS
    13. Clemens Thielen & Philipp Weinschenk, 2025. "Analyzing the effects of minimum wages: a microeconomic approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 79(3), pages 945-991, May.
    14. Hampton, Matt & Totty, Evan, 2023. "Minimum wages, retirement timing, and labor supply," Journal of Public Economics, Elsevier, vol. 224(C).
    15. Lennon, Conor & Teltser, Keith F. & Fernandez, Jose & Gohmann, Stephan, 2023. "How morality and efficiency shape public support for minimum wages," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 618-637.
    16. Arindrajit Dube & Attila Lindner, 2021. "City Limits: What Do Local-Area Minimum Wages Do?," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 27-50, Winter.
    17. Link, Sebastian, 2024. "The price and employment response of firms to the introduction of minimum wages," Journal of Public Economics, Elsevier, vol. 239(C).
    18. Yasar, Serife, 2026. "Minimum wages and the gender wage gap within firms," Ruhr Economic Papers 1204, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    19. Pestel, Nico & Bonin, Holger & Isphording, Ingo E. & Gregory, Terry & Caliendo, Marco, 2020. "Auswirkungen des gesetzlichen Mindestlohns auf Beschäftigung und Arbeitslosigkeit," IZA Research Reports 95, Institute of Labor Economics (IZA).
    20. Winters, John V., 2022. "Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas," IZA Discussion Papers 15499, IZA Network @ LISER.
    21. Liu, Qing & Lu, Ruosi & Teng Sun, Stephen & Zhang, Meng, 2024. "Unintended workplace safety consequences of minimum wages," Journal of Public Economics, Elsevier, vol. 239(C).

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J8 - Labor and Demographic Economics - - Labor Standards

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:98:y:2026:i:c:s0927537125001502. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.