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New answers to old questions: The effects of the minimum wage hike in Spain in 2019

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  • Christl, Michael
  • Cubells Enguídanos, Andrea
  • di Pietro, Filippo

Abstract

Our paper examines the effects of the significant 2019 minimum wage hike in Spain on labour market outcomes, prices, and firm bankruptcies. We use the synthetic control method (SCM) to analyze the impact of the policy on the Spanish economy. We find no significant impact of the minimum wage increase on labour market outcomes for low-skilled individuals, suggesting no major job losses or increased unemployment among this group. However, we observe a significant increase in prices, especially for services and processed food, with treatment effects reaching up to 3 percentage points in 2021 relative to the synthetic control group. In addition, we observe a slight increase in firm bankruptcies in industry and construction during the COVID-19 pandemic. While our results suggest that the minimum wage increase did not lead to significant job losses among vulnerable groups, it did lead to higher prices in certain sectors, which could negatively affect consumers. This is consistent with recent research from Germany, which found minimal effects on labour market outcomes but significant effects on prices following the introduction of a minimum wage.

Suggested Citation

  • Christl, Michael & Cubells Enguídanos, Andrea & di Pietro, Filippo, 2024. "New answers to old questions: The effects of the minimum wage hike in Spain in 2019," GLO Discussion Paper Series 1533, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1533
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    References listed on IDEAS

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    More about this item

    Keywords

    Minimum wage; Synthetic Control Method; labour market; prices; employment;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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