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

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  • Sebastian Schmitz

Abstract

In 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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  • Sebastian Schmitz, 2019. "The Effects of Germany's Statutory Minimum Wage on Employment and Welfare Dependency," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 330-355, August.
    • Handle: RePEc:bla:germec:v:20:y:2019:i:3:p:330-355
    DOI: 10.1111/geer.12196
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    Cited by:

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    2. Mario Bossler & Michael Oberfichtner & Claus Schnabel, 2020. "Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights From a Survey Experiment," LABOUR, CEIS, vol. 34(3), pages 323-346, September.
    3. Bossler, Mario & Westermeier, Christian, 2020. "Measurement error in minimum wage evaluations using survey data," IAB-Discussion Paper 202011, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Friedrich Martin, 2020. "Using Occupations to Evaluate the Employment Effects of the German Minimum Wage," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 269-294, April.
    5. Andreas Knabe & Ronnie Schöb & Marcel Thum & Bruttel,Oliver & Benjamin Börschlein & Bossler Mario & Felix Pakleppa & Holger Bonin & Nico Pestel & Alexandra Fedorets & Marco Caliendo, 2020. "Balance after Five Years: What Has the Legal Minimum Wage Achieved?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(04), pages 03-28, April.
    6. Börschlein, Benjamin & Bossler, Mario, 2021. "A new machine learning-based treatment bite for long run minimum wage evaluations," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242441, Verein für Socialpolitik / German Economic Association.
    7. Alexandra Fedorets, 2021. "12 Euro Mindestlohn: neue Erwartungen und alte Hürden," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(12), pages 929-932, December.
    8. Marco Caliendo & Nico Pestel & Rebecca Olthaus, 2023. "Long-Term Employment Effects of the Minimum Wage in Germany: New Data and Estimators," Papers 2310.15964, arXiv.org.
    9. Schank, Thorsten & Bossler, Mario, 2020. "Wage inequality in Germany after the minimum wage introduction," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224543, Verein für Socialpolitik / German Economic Association.
    10. Martin Beznoska & Tobias Hentze & Maximilian Stockhausen, 2020. "The inheritance and gift tax in Germany: Reform potentials for tax revenue, efficiency and distribution," Public Sector Economics, Institute of Public Finance, vol. 44(3), pages 385-417.
    11. Jonathan Cribb & Giulia Giupponi & Robert Joyce & Attila Lindner & Tom Waters & Thomas Wernham & Xiaowei Xu, 2021. "The distributional and employment impacts of nationwide Minimum Wage changes," IFS Working Papers W21/48, Institute for Fiscal Studies.
    12. Pestel, Nico & Bonin, Holger & Isphording, Ingo E. & Gregory, Terry & Caliendo, Marco, 2020. "Auswirkungen des gesetzlichen Mindestlohns auf Beschäftigung und Arbeitslosigkeit," IZA Research Reports 95, Institute of Labor Economics (IZA).
    13. Adam Ayaita, 2022. "Does Money Change Who You Are? Quasi-Experimental Evidence on the Effects of Wage Increases on Personality," SOEPpapers on Multidisciplinary Panel Data Research 1170, DIW Berlin, The German Socio-Economic Panel (SOEP).
    14. Ayaita, Adam, 2022. "Does Money Change Who You Are? Quasi-Experimental Evidence on the Effects of Wage Increases on Personality," EconStor Preprints 256931, ZBW - Leibniz Information Centre for Economics.

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