Minimum wage and employment : the case of Spain

Abstract

Minimum wage policies are intended to increase the standards of living of lowwage workers and reduce income inequality. However, there are concerns that minimum wage increases could have a negative impact on employment for several reasons. This study examines the effects of increases in the minimum wage on the level of employment in Spain between 2008 and 2019, considering the average wage and checking for potential different effects on women. Our OLS estimates show that minimum wage increases have a negative impact on employment when they are not accompanied by a proportional increase in average wages. On the contrary, when minimum wages increase at the same rate as average wages do, the effects on employment prove to be positive. As for women, our OLS estimates show that, indeed, effects are different for the female population, but, contrary to what we would have expected, not in a negative way