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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
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.:
- Haucap, Justus & Pauly, Uwe & Wey, Christian, 2001.
"Collective wage setting when wages are generally binding An antitrust perspective,"
International Review of Law and Economics,
Elsevier, vol. 21(3), pages 287-307, September.
- Justus Haucap & Uwe Pauly & Christian Wey, 2000. "Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective," CIG Working Papers FS IV 00-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Braun, Sebastian, 2011. "Unionisation structures, productivity and firm performance: New insights from a heterogeneous firm model," Labour Economics, Elsevier, vol. 18(1), pages 120-129, January.
- Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010.
"Rising wage inequality, the decline of collective bargaining, and the gender wage gap,"
Elsevier, vol. 17(5), pages 835-847, October.
- Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising Wage Inequality, the Decline of Collective Bargaining, and the Gender Wage Gap," IZA Discussion Papers 4911, Institute for the Study of Labor (IZA).
- Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," ZEW Discussion Papers 10-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027.
- Gernot Nerb, 2006. "Mögliche Auswirkungen der geplanten EU-Dienstleistungsrichtlinie auf die Wirtschaft Deutschlands," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 59(05), pages 19-24, 03.
- Thomas Kiessl & Carsten Pohl & Heinz Schmalholz, 2006. "Ostdeutsche Unternehmen betrachten EU-Dienstleistungsrichtlinie mit Skepsis," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 13(01), pages 15-26, 02.
- Shingo Ishiguro & Laixun Zhao, 2009. "Raising Wages To Deter Entry Into Unionized Markets," The Japanese Economic Review, Japanese Economic Association, vol. 60(4), pages 435-445.
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 email@example.com (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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.