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The relationship between minimum wage and employment. A synthetic control method approach

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Article

Arnadillo, Juan L. ; Fuenmayor, Amadeo ; Granell, Rafael

The Economic and Labour Relations Review

2024

Early view

1-21

minimum wage ; employment

Spain

Wages and wage payment systems

https://doi.org/10.1017/elr.2024.44

English

"Spain increased its minimum wage (MW) by 22% in 2019. Given the intense debate in the economic literature on the impact of MW increases on the labour market, we conduct an impact assessment of this policy. The synthetic control method will be used to replicate the Spanish labour market by means of a pool of European countries that, in the absence of other reliable measures, simulates the evolution of Spanish employment. This will allow us to identify the causal effect from the increase in the MW. After applying the technique, the increase in the MW is found to have no effect on employment. The results have been subjected to robustness tests such as leave one out or segmentation by gender or age."

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