Last week, the AIReF ("Independent Authority for Fiscal Responsibility") published a devastating report on the harmful effects of the Minimum Vital Income (IMV in Spanish). As five years have passed since José Luis Escrivá (social security minister) launched this subsidy, the AIReF has conducted a comprehensive analysis of the causal impact of this benefit on the labor decisions of its beneficiaries.
The study's results tell us that last-resort benefits, such as the IMV, influence the reservation wage of beneficiaries—that is, the minimum wage at which a worker would be willing to accept a job—which means fewer people are willing to work.
The organization's president, Cristina Herrero, went so far as to state during the study's presentation that the result did not surprise her. And indeed, the failure of this benefit has already been demonstrated in other countries. Below are some of the conclusions:
- Receiving the IMV decreases the probability of working by 12%, although it exceeds 20% when it comes to high salaries or young people.
- For those who lose the IMV, their willingness to work increases by 7%.
- Another concerning fact is that 90% of beneficiaries remain on it for more than twelve months, 75% exceed twenty-four months, and approximately 60% maintain the benefit for more than three years. Therefore, it is not an emergency payment.
In the government, far from being concerned, they celebrate that more and more people in Spain are receiving this benefit. From its creation until last June, the Minimum Vital Income has reached more than 3,120,000 people since its implementation. Since then, the state has disbursed a whopping 15,348.6 million euros at the taxpayer's expense. Each year, the number of IMV recipients exceeds that of the previous year.
