The German Statutory Minimum Wage and Its Effects on Regional Employment and Unemployment

AbstractThis paper studies the effects of the introduction of Germany’s statutory minimum wage in 2015 on employment and unemployment on the level of regional labor markets. Using variation in the regional exposure to the new wage floor, we employ a difference-in-differences approach that compares the evolution of employment and unemployment between regions with varying minimum wage bites. Overall, we find no statistically significant effect of the introduction of the German minimum wage on regular employment subject to social insurance, but a statistically significant negative effect on marginal employment. The reduction is not accompanied by a proportional increase in unemployment.

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The Effects of Germany’s Statutory Minimum Wage on Employment and Welfare Dependency

German Economic Review ◽

10.1111/geer.12196 ◽

2019 ◽

Vol 20 (3) ◽

pp. 330-355 ◽

Cited By ~ 5

Author(s):

Sebastian Schmitz

Keyword(s):

Minimum Wage ◽

Welfare Recipients ◽

County Level ◽

Welfare Dependency ◽

Welfare Receipt ◽

Difference In Differences ◽

Regular Employment ◽

Negative Effect ◽

Marginal Employment ◽

The Difference

AbstractIn January 2015, Germany introduced a federal, statutory minimum wage of 8.50 € per hour. This study evaluates the effects of this policy on regular and marginal employment and on welfare dependency. Based on the county-level administrative data, this study uses the difference-in-differences technique, exploiting regional variation in the bite of the minimum wage, i.e., the county-specific share of employees paid less than 8.50 € before the introduction of the minimum wage. The minimum wage had a considerable negative effect on marginal employment. There is also some indication that regular employment was slightly reduced. Concerning welfare dependency, the minimum wage reduced the number of working welfare recipients, with some indication that about one half of them left welfare receipt due to the minimum wage.

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Using Occupations to Evaluate the Employment Effects of the German Minimum Wage

Jahrbücher für Nationalökonomie und Statistik ◽

10.1515/jbnst-2018-0085 ◽

2020 ◽

Vol 240 (2-3) ◽

pp. 269-294 ◽

Cited By ~ 1

Author(s):

Martin Friedrich

Keyword(s):

Minimum Wage ◽

West Germany ◽

Difference In Differences ◽

Regional Effect ◽

Employment Effects ◽

Regular Employment ◽

Short Run ◽

Wage Floor ◽

Effect Heterogeneity ◽

The Impact

AbstractThis paper evaluates the short to medium run employment effects of the 2015 introduction of a statutory minimum wage in Germany. The effect of the policy is recovered from variation in the bite of the minimum wage across occupations using a difference-in-differences estimator. The analysis reveals that the reform only had a small impact on employment and highlights the importance of regional effect heterogeneity. In East Germany, marginal employment decreased by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to the minimum wage. In West Germany, no negative employment effects are detectable, but regular employment increased temporarily because of the reform. The medium run estimates include the impact of the first marginal increase of the wage floor from €8.50 to €8.84 in 2017.

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