Machine Learning Analysis of the Impact of Increasing the Minimum Wage on Income Inequality in Spain from 2001 to 2021

TL;DR

This study uses machine learning on comprehensive Spanish census data from 2001 to 2021 to show that increasing the minimum wage reduced income inequality, boosted employment, and increased corporate profits without causing inflation.

Contribution

It provides a novel analysis using machine learning on a national census dataset to evaluate the impact of minimum wage increases on income inequality and economic indicators in Spain.

Findings

Minimum wage increases reduced income inequality.

Raising the minimum wage did not cause inflation or unemployment.

Employment and corporate profits increased with higher minimum wages.

Abstract

This paper analyzes the impact of the National Minimum Wage from 2001 to 2021. The MNW increased from 505.7/month (2001) to 1,108.3/month (2021). Using the data provided by the Spanish Tax Administration Agency, databases that represent the entire population studied can be analyzed. More accurate results and more efficient predictive models are provided by these counts. This work is characterized by the database used, which is a national census and not a sample or projection. Therefore, the study reflects results and analyses based on historical data from the Spanish Salary Census 2001-2021. Various machine-learning models show that income inequality has been reduced by raising the minimum wage. Raising the minimum wage has not led to inflation or increased unemployment. On the contrary, it has been consistent with increased net employment, contained prices, and increased corporate profit margins. The most important conclusion is that an increase in the minimum wage in the period analyzed has led to an increase in the wealth of the country, increasing employment and company profits, and is postulated, under the conditions analyzed, as an effective method for the redistribution of wealth.