Evaluating the German "Mini-Job" Reform Using a True Natural Experiment
AbstractIncreasing work incentives for people with low incomes is a common topic in the policy debate across European countries. The "Mini-Job" reform in Germany - introduced on April 1, 2003 - can be seen in line with these policies, exempting labour income below a certain threshold from taxes and employees' social security contributions. We carry out an ex-post evaluation to identify the short-run effects of this reform. Our identification strategy uses an exogenous variation in the interview months in the German Socio-Economic Panel, that allows us to distinguish groups that are (or are not) affected by the reform. To account for seasonal effects we additionally use a difference-in-differences strategy. The results show that the short-run effects of the reform are limited. We find no significant short-run effects for marginal employment. However, there is evidence that single men who are already employed react immediately and increase secondary job holding.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 569.
Length: 21 p.
Date of creation: 2006
Date of revision:
Evaluation; natural experiment; difference-in-differences; marginal employment;
Other versions of this item:
- Caliendo, Marco & Wrohlich, Katharina, 2006. "Evaluating the German "Mini-Job" Reform Using a True Natural Experiment," IZA Discussion Papers 2041, Institute for the Study of Labor (IZA).
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
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