Minimum Wages as a Barrier to Entry: Evidence from Germany
AbstractThis study analyses employers' support for the introduction of industry-specific minimum wages as a cost-raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we find some evidence that high-productivity employers support minimum wages. We further show that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low-wage competition from Central and Eastern European Countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages if union coverage is low and the mark-up of union wage rates is high.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6484.
Length: 27 pages
Date of creation: Apr 2012
Date of revision:
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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Ronald Bachmann & Thomas K. Bauer & Hanna Kröger, 2012. "Minimum Wages as a Barrier to Entry – Evidence from Germany," Ruhr Economic Papers 0329, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L80 - Industrial Organization - - Industry Studies: Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-02 (All new papers)
- NEP-EUR-2012-05-02 (Microeconomic European Issues)
- NEP-HME-2012-05-02 (Heterodox Microeconomics)
- NEP-LAB-2012-05-02 (Labour Economics)
- NEP-LMA-2012-05-02 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- When do employers support minimum wages?
by Economic Logician in Economic Logic on 2012-06-08 14:35:00
- When do employers support minimum wages?
by firstname.lastname@example.org (Paul Walker) in Anti-Dismal on 2012-06-09 00:26:00
by himaginary in himaginaryの日記 on 2012-06-11 07:00:00
- Bachmann, Ronald & König, Marion & Schaffner, Sandra, 2012.
"Lost in Transition? Minimum Wage Effects on German Construction Workers,"
IZA Discussion Papers
6760, Institute for the Study of Labor (IZA).
- Ronald Bachmann & Marion König & Sandra Schaffner, 2012. "Lost in Transition? – Minimum Wage Effects on German Construction Workers," Ruhr Economic Papers 0358, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Philipp vom Berge & Hanna Frings & Alfredo R. Paloyo, 2013. "High-Impact Minimum Wages and Heterogeneous Regions," Ruhr Economic Papers 0408, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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