Evaluating the impact of the large 2019 increase in the Spanish minimum wage on job retention and employment

This study investigates the impact of a substantial 22.3% increase in Spain’s national minimum wage, implemented on January 1, 2019, on job retention and employment. Utilizing individual administrative data and applying a difference-in-differences methodology with inverse probability weighting, the analysis finds no adverse effects of the minimum wage increase on job retention within the same firm or on overall employment permanence. Notably, the findings indicate modest positive effects on employment retention in low-wage regions and among full-time and temporary employees, though these effects are very short-lived. The findings align with theoretical frameworks suggesting that minimum wage increases may not necessarily lead to job losses, and they resonate with broader literature indicating neutral employment effects, especially for lower-income groups.