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Minimum Wage Not yet for Everyone: On the Compensation of Eligible Workers before and after the Minimum Wage Reform from the Perspective of Employees


  • Patrick Burauel
  • Marco Caliendo
  • Alexandra Fedorets
  • Markus M. Grabka
  • Carsten Schröder
  • Jürgen Schupp
  • Linda Wittbrodt


Calculations based on data from the Socio-Economic Panel (SOEP) show that after the introduction of a statutory minimum wage in Germany in January 2015, the wage growth of eligible employees with low wages accelerated significantly. Before the reform, the nominal growth in contractual hourly wages in the lowest decile, the bottom tenth of the pay distribution, was less than two percent in the long-term two-year average, while from 2014 to 2016 it was around 15 percent. Nevertheless, in the first half of 2016, around 1.8 million employees who were eligible for the minimum wage of 8.50 euros gross per hour still earned contractual hourly wages below this level. In 2015, the count was approximately 2.1 million workers, and in the year before the introduction of the minimum wage, almost 2.8 million. The figures for 2015 and 2016 reported here are thus higher than corresponding figures from company surveys. Despite the disproportionate increase in wages in the lowest wage decile, many workers are still not earning the minimum wage. The objectives of the German Minimum Wage Act (Mindestlohngesetz) are often not being met, especially among the marginally employed. Instruments for better enforcement of the Minimum Wage Act include more frequent inspections, stricter sanctioning, more effective grievance procedures for workers, and stricter requirements for the documentation systems (especially timekeeping).

Suggested Citation

  • Patrick Burauel & Marco Caliendo & Alexandra Fedorets & Markus M. Grabka & Carsten Schröder & Jürgen Schupp & Linda Wittbrodt, 2017. "Minimum Wage Not yet for Everyone: On the Compensation of Eligible Workers before and after the Minimum Wage Reform from the Perspective of Employees," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 7(49), pages 509-522.
  • Handle: RePEc:diw:diwdeb:2017-49-1

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    Cited by:

    1. Caliendo, Marco & Wittbrodt, Linda, 2022. "Did the minimum wage reduce the gender wage gap in Germany?," Labour Economics, Elsevier, vol. 78(C).
    2. Caliendo, Marco & Fedorets, Alexandra & Preuss, Malte & Schröder, Carsten & Wittbrodt, Linda, 2018. "The short-run employment effects of the German minimum wage reform," Labour Economics, Elsevier, vol. 53(C), pages 46-62.
    3. Baptiste Françon, 2020. "Salaire minimum en Allemagne et segmentation de l’emploi," Post-Print halshs-03217241, HAL.
    4. Oliver Bruttel, 2019. "The effects of the new statutory minimum wage in Germany: a first assessment of the evidence," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-13, December.
    5. Baptiste Françon, 2021. "Salaire minimum en Allemagne et segmentation de l’emploi," Working Papers halshs-03217241, HAL.
    6. Caliendo Marco & Wittbrodt Linda & Schröder Carsten, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany – An Overview," German Economic Review, De Gruyter, vol. 20(3), pages 257-292, August.
    7. Luke Haywood, 2023. "Gendered Effects of the Minimum Wage," UB School of Economics Working Papers 2023/450, University of Barcelona School of Economics.
    8. 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.
    9. Baptiste Françon, 2020. "Salaire minimum en Allemagne et segmentation de l’emploi," Working Papers of BETA 2020-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    10. Teresa Backhaus & Kai-Uwe Müller, 2019. "Does the German Minimum Wage Help Low Income Households?: Evidence from Observed Outcomes and the Simulation of Potential Effects," Discussion Papers of DIW Berlin 1805, DIW Berlin, German Institute for Economic Research.
    11. Mario Bossler & Ursula Jaenichen & Simeon Schächtele, 2022. "How effective are enforcement measures for compliance with the minimum wage? Evidence from Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 43(2), pages 943-971, May.
    12. Peter Valet & Jule Adriaans & Stefan Liebig, 2019. "Comparing survey data and administrative records on gross earnings: nonreporting, misreporting, interviewer presence and earnings inequality," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(1), pages 471-491, January.

    More about this item


    Minimum wage; inequality; employment; SOEP;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


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