The Causal Effects of the Minimum Wage Introduction in Germany

  • In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short-run effects of this new minimum wage on a wide set of socio-economic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self-employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non-compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low-wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialized in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non-compliance was substantial in the shortIn 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short-run effects of this new minimum wage on a wide set of socio-economic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self-employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non-compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low-wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialized in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non-compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide-reaching policy.show moreshow less

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Metadaten
Author:Marco CaliendoGND, Carsten SchröderGND, Linda Wittbrodt
URN:urn:nbn:de:kobv:517-opus4-426929
DOI:https://doi.org/10.25932/publishup-42692
ISSN:2628-653X
Parent Title (German):CEPA Discussion Papers
Subtitle (German):An Overview
Series (Serial Number):CEPA Discussion Papers (1)
Document Type:Working Paper
Language:English
Date of first Publication:2019/04/16
Year of Completion:2019
Publishing Institution:Universität Potsdam
Release Date:2019/04/16
Tag:Earnings; Employment; Evaluation; Minimum Wage; Working Hours
Issue:1
RVK - Regensburg Classification:QV 350, QV 300
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Zentrale und wissenschaftliche Einrichtungen / Center for Economic Policy Analysis (CEPA)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL Classification:J Labor and Demographic Economics / J2 Demand and Supply of Labor / J22 Time Allocation and Labor Supply
J Labor and Demographic Economics / J2 Demand and Supply of Labor / J23 Labor Demand
J Labor and Demographic Economics / J3 Wages, Compensation, and Labor Costs / J31 Wage Level and Structure; Wage Differentials
J Labor and Demographic Economics / J3 Wages, Compensation, and Labor Costs / J38 Public Policy
Peer Review:Nicht referiert
Licence (German):License LogoKeine Nutzungslizenz vergeben - es gilt das deutsche Urheberrecht