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The empirical literature on the minimum wage is really disorienting. While relatively simple theory tells us that a minimum wage increase should decrease labor demand for the lowest wage categories and thus hurt the young workers most, results on the labor demand have certainly not been clear-cut. But at least there is agreement that it hurts the young workers most, right?
Wrong. Sofía Galán and Sergio Puente managed to find a contradictory result by looking at the impact of the major minimum wage increases from 2004 to 2010 in Spain. And among all age groups, the ones that lost the most jobs are the oldest. Of course, there is a way to rationalize this: The oldest are not going to improve the productivity in coming years. The young do, however, and are more worth keeping on the job, especially knowing the rigid labor laws in Spain. Speaking of which, I wonder how those labor laws, which have changed during that sample period, could affect the results. In particular, these changes in laws about temporary workers and firing costs must have had a different impact on the various worker cohorts.
Wrong. Sofía Galán and Sergio Puente managed to find a contradictory result by looking at the impact of the major minimum wage increases from 2004 to 2010 in Spain. And among all age groups, the ones that lost the most jobs are the oldest. Of course, there is a way to rationalize this: The oldest are not going to improve the productivity in coming years. The young do, however, and are more worth keeping on the job, especially knowing the rigid labor laws in Spain. Speaking of which, I wonder how those labor laws, which have changed during that sample period, could affect the results. In particular, these changes in laws about temporary workers and firing costs must have had a different impact on the various worker cohorts.
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