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Labour Market Effects of a Nationwide Minimum Wage in Germany – a Sensitivity Analysis

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  • Steffen Henzel
  • Kira Engelhardt

Abstract

The introduction of a nationwide minimum wage in 2015 in Germany represents a massive economic policy intervention in wage distribution. There is, however, a great deal of uncertainty over the effects that are expected to occur in the labour markets. In addition to information already available on wage distribution, additional assumptions need to be made. A central assumption is related to the wage elasticity of labour demand, another assumption is related to the share of low earners who are actually affected by a minimum wage regulation. An analysis by the Ifo Institute shows the effects of a minimum wage on average wages and the wage bill, as well as on the number of employees based on a range of rational assumptions.

Suggested Citation

  • Steffen Henzel & Kira Engelhardt, 2014. "Labour Market Effects of a Nationwide Minimum Wage in Germany – a Sensitivity Analysis," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(10), pages 23-29, May.
    • Handle: RePEc:ces:ifosdt:v:67:y:2014:i:10:p:23-29
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    References listed on IDEAS

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    Cited by:

    1. Holtemöller, Oliver & Pohle, Felix, 2020. "Employment effects of introducing a minimum wage: The case of Germany," Economic Modelling, Elsevier, vol. 89(C), pages 108-121.
    2. Robert Lehmann & Joachim Ragnitz & Michael Weber, 2015. "Mindestlohn in Ostdeutschland: Firmen planen Preiserhöhungen und Personalabbau," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 22(01), pages 40-42, February.
    3. Christian Erthle & Klaus Wohlrabe & Przemyslaw Wojciechowski, 2014. "The Nationwide Minimum Wage and Companies’ Reaction to It – Results of a Special Poll Featuring in the Ifo Business Survey," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(23), pages 50-52, December.
    4. Arne Heise, 2019. "The resilience of modern neoclassical economics – a case study in the light of Ludwik Fleck’s ‘harmony of deception’," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 13(1), pages 1-18, November.
    5. Schmitz, Sebastian, 2017. "The effects of Germany's new minimum wage on employment and welfare dependency," Discussion Papers 2017/21, Free University Berlin, School of Business & Economics.
    6. Heise, Arne, 2021. "How did they get it so wrong? Mindestlöhne und ihre Bedrohung für die Standardökonomie," ZÖSS-Discussion Papers 85, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    7. Christian Breuer, 2014. "Tax Revenue, Minimum Wage and the "Bracket Creep" in the Income-tax Structure," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(11), pages 38-42, June.
    8. Antje Schubert & Johannes Steinbrecher & Marcel Thum & Michael Weber, 2016. "The Impact of the Statutory Minimum Wage Act in Saxony," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 77.
    9. Boll, Christina & Hüning, Hendrik & Leppin, Julian & Puckelwald, Johannes, 2015. "Potenzielle Auswirkungen des Mindestlohnes auf den Gender Pay Gap in Deutschland: Eine Simulationsstudie," HWWI Policy Papers 89, Hamburg Institute of International Economics (HWWI).
    10. Boll, Christina & Hüning, Hendrik & Leppin, Julian & Puckelwald, Johannes, 2015. "Potential effects of a statutory minimum wage on the gender pay gap: A simulation-based study for Germany," HWWI Research Papers 163, Hamburg Institute of International Economics (HWWI).
    11. Arne Heise, 2022. "Mindestlöhne, Beschäftigung und die „Harmonie der Täuschungen“," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 48(1), pages 83-107.
    12. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2014. "Mehr Vertrauen in Marktprozesse. Jahresgutachten 2014/15 [More confidence in market processes. Annual Report 2014/15]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201415.

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    More about this item

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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