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The regional effects of Germany’s national minimum wage

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  • Ahlfeldt, Gabriel
  • Roth, Duncan
  • Seidel, Tobias

Abstract

We estimate the spatially differential effects of a nationally uniform minimum wage that was introduced in Germany in 2015. To this end, we use a micro data set covering the universe of employed and unemployed individ-uals in Germany from 2011 to 2016 and a difference-in-differences based identification strategy that controls for heterogeneity in pre-treatment outcome trends. We find that the policy led to spatial wage convergence, in par-ticular in the left tail of the distribution, without reducing relative employment in low-wage regions within the first two years.

Suggested Citation

  • Ahlfeldt, Gabriel & Roth, Duncan & Seidel, Tobias, 2018. "The regional effects of Germany’s national minimum wage," CEPR Discussion Papers 13005, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13005
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    References listed on IDEAS

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    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2101-2163 is not listed on IDEAS
    2. Machin, Stephen & Manning, Alan & Rahman, Lupin, 2002. "Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector," LSE Research Online Documents on Economics 20070, London School of Economics and Political Science, LSE Library.
    3. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163, Elsevier.
    4. Gabriel M Ahlfeldt & Arne Feddersen, 2018. "From periphery to core: measuring agglomeration effects using high-speed rail," Journal of Economic Geography, Oxford University Press, vol. 18(2), pages 355-390.
    5. Gabriel Ahlfeldt & Duncan Roth & Tobias Seidel, 2018. "The Regional Effects of a National Minimum Wage," CESifo Working Paper Series 6924, CESifo.
    6. Stephen Machin & Alan Manning, 2004. "A Test of Competitive Labor Market Theory: The Wage Structure among Care Assistants in the South of England," ILR Review, Cornell University, ILR School, vol. 57(3), pages 371-385, April.
    7. Baek, Jisun & Park, WooRam, 2016. "Minimum wage introduction and employment: Evidence from South Korea," Economics Letters, Elsevier, vol. 139(C), pages 18-21.
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    9. Stephen Machin & Alan Manning & Lupin Rahman, 2003. "Where the Minimum Wage Bites Hard: Introduction of Minimum Wages to a Low Wage Sector," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 154-180, March.
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    More about this item

    Keywords

    Difference-in-differences; Employment; Germany; Minimum wage; Wage inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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