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The German Minimum Wage: Effects on Productivity, Profitability, and Investments

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  • Bossler Mario
  • Gürtzgen Nicole
  • Betzl Ute
  • Feist Lisa

    (Institut für Arbeitsmarkt- und Berufsforschung, Regensburger Str. 100, Nürnberg, Germany)

  • Lochner Benjamin

    (Friedrich-Alexander-Universität Erlangen-Nürnberg - Campus Nürnberg, Nürnberg, Germany)

Abstract

In this article, we analyze the effects of the introduction of the German minimum wage using difference-in-differences estimations applied to the IAB Establishment Panel. The treatment effects on the treated establishments show a significant increase in personnel costs. When we analyze the effects of the minimum wage on the net sales of intermediates, we observe a reduction, which is fully explained by the increase in wage costs induced by the minimum wage. The results do not point to effects on establishment-level productivity or capital investments. Looking at investments in human capital, we do not observe any effects on apprenticeship offers or the placement of apprentices. If anything, the results point at a slight reduction in the provision of further training.

Suggested Citation

  • Bossler Mario & Gürtzgen Nicole & Betzl Ute & Feist Lisa & Lochner Benjamin, 2020. "The German Minimum Wage: Effects on Productivity, Profitability, and Investments," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 321-350, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:321-350:n:2
    DOI: 10.1515/jbnst-2018-0074
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    References listed on IDEAS

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    Cited by:

    1. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Lucas Hafner & Benjamin Lochner, 2022. "Do minimum wages improve self-rated health? Evidence from a natural experiment," Empirical Economics, Springer, vol. 62(6), pages 2989-3014, June.
    3. Zhengyang Bao & Andreas Leibbrandt, 2020. "Tournaments with Safeguards: A Blessing or a Curse for Women?," Monash Economics Working Papers 02-20, Monash University, Department of Economics.

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    More about this item

    Keywords

    minimum wage; productivity; profitability; training;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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