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Wage inequality in Germany after the minimum wage introduction

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  • Schank, Thorsten
  • Bossler, Mario

Abstract

While monthly wage inequality in Germany continued to increase strongly until 2010, it recently returned to the level of the year 2000. We assess the role of the national minimum wage introduced in 2015. Unconditional quantile regressions combined with difference-indifferences show significant minimum wage effects of varying magnitudes along the lower half of the wage distribution. Employment dynamics cannot explain the effects along the wage distribution, implying strong wage increases among the existing workforce. Wage increases are not offset by decreasing social benefits. Overall, the minimum wage introduction can account for about half of the recent decrease in wage inequality

Suggested Citation

  • Schank, Thorsten & Bossler, Mario, 2020. "Wage inequality in Germany after the minimum wage introduction," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224543, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc20:224543
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    2. Jan Pintera, 2022. "Skill-bias and Wage Inequality in the EU New Member States: Empirical Investigation," Working Papers IES 2022/26, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2022.
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    5. Bernd Fitzenberger & Arnim Seidlitz, 2020. "Die Lohnungleichheit von Vollzeitbeschäftigten in Deutschland: Rückblick und Überblick [Wage inequality among the full-time employed in Germany revisited: An overview]," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 14(2), pages 125-143, July.
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    12. Schmid, Ramona, 2022. "Mind the gap: Effects of the national minimum wage on the gender wage gap in Germany," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2022, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    13. Schmid, Ramona, 2023. "Mind the Gap: Effects of the National Minimum Wage on the Gender Wage Gap in Germany," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277646, Verein für Socialpolitik / German Economic Association.
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    15. Judith Niehues & Maximilian Stockhausen & Andreas Peichl & Charlotte Bartels & Mario Bossler & Bernd Fitzenberger & Arnim Seidlitz & Moritz Kuhn & Till Baldenius & Sebastian Kohl & Moritz Schularick &, 2020. "Ungleichheit unter der Lupe – neue politische Antworten auf ein bekanntes Thema," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 03-26, February.
    16. Mario Bossler & Martin Popp, 2022. "Labor Demand on a Tight Leash," Papers 2203.05593, arXiv.org, revised Feb 2024.
    17. Costanza Naguib, 2022. "Did earnings mobility change after minimum wage introduction? Evidence from parametric and semi‐nonparametric methods in Germany," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(7), pages 1379-1402, November.
    18. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2023. "The short- and medium-term distributional effects of the German minimum wage reform," Empirical Economics, Springer, vol. 64(3), pages 1149-1175, March.
    19. Cornelius Plaul, 2022. "Gleicher als gedacht? Eine Analyse zur Ermittlung wohnpreisbereinigter Verdienste in Deutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 29(01), pages 21-28, February.
    20. Brall, Franziska & Schmid, Ramona, 2020. "Automation, robots and wage inequality in Germany: A decomposition analysis," Hohenheim Discussion Papers in Business, Economics and Social Sciences 14-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    21. Roupakias, Stelios, 2022. "Employment and distributional effects of Greece’s national minimum wage," MPRA Paper 114244, University Library of Munich, Germany.
    22. Lübker, Malte & Schulten, Thorsten, 2021. "WSI-minimum wage report 2021: Is Europe en route to adequate minimum wages?," WSI Reports 63e, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    23. Lars P. Feld & Jan L. Fries & Malte Preuß & Christoph M. Schmidt, 2020. "Verteilungsfragen in Deutschland: Herausforderungen der Messung und der zielgerichteten Umverteilung," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(4), pages 233-237, April.
    24. Börschlein, Benjamin & Bossler, Mario, 2021. "A new machine learning-based treatment bite for long run minimum wage evaluations," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242441, Verein für Socialpolitik / German Economic Association.
    25. Börschlein, Erik-Benjamin & Bossler, Mario, 2021. "Rückgang der Arbeitsnachfrage in der Corona-Krise: Kurzfristig sind Mindestlohnbetriebe etwas stärker betroffen : Aktualisierte Version vom 20.12.2021 (Decreasing labor demand in course of the Corona-," IAB-Kurzbericht 202112, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    Keywords

    minimum wage; inequality; wages; Germany;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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