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The regional effects of Germany’s national minimum wage

Author

Listed:
  • Ahlfeldt, Gabriel M.
  • Roth, Duncan
  • Seidel, Tobias

Abstract

We show that the minimum wage introduced in Germany in 2015 led to spatial wage convergence, in particular in the left tail of the distribution, without reducing relative employment in low-wage regions within the first two years.

Suggested Citation

  • Ahlfeldt, Gabriel M. & Roth, Duncan & Seidel, Tobias, 2018. "The regional effects of Germany’s national minimum wage," Economics Letters, Elsevier, vol. 172(C), pages 127-130.
  • Handle: RePEc:eee:ecolet:v:172:y:2018:i:c:p:127-130
    DOI: 10.1016/j.econlet.2018.08.032
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    References listed on IDEAS

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    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2101-2163 is not listed on IDEAS
    2. Machin, Stephen & Manning, Alan & Rahman, Lupin, 2002. "Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector," LSE Research Online Documents on Economics 20070, London School of Economics and Political Science, LSE Library.
    3. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier.
    4. Stephen Machin & Alan Manning & S Woodland, 1993. "Are Workers Paid their Marginal Product? Evidence from a Low Wage Labour Market," CEP Discussion Papers dp0158, Centre for Economic Performance, LSE.
    5. Gabriel M Ahlfeldt & Arne Feddersen, 2018. "From periphery to core: measuring agglomeration effects using high-speed rail," Journal of Economic Geography, Oxford University Press, vol. 18(2), pages 355-390.
    6. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2017. "The Short-Term Distributional Effects of the German Minimum Wage Reform," SOEPpapers on Multidisciplinary Panel Data Research 948, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Stephen Machin & Alan Manning & Lupin Rahman, 2003. "Where the Minimum Wage Bites Hard: Introduction of Minimum Wages to a Low Wage Sector," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 154-180, March.
    8. Stephen Machin & Alan Manning, 2004. "A Test of Competitive Labor Market Theory: The Wage Structure among Care Assistants in the South of England," ILR Review, Cornell University, ILR School, vol. 57(3), pages 371-385, April.
    9. Baek, Jisun & Park, WooRam, 2016. "Minimum wage introduction and employment: Evidence from South Korea," Economics Letters, Elsevier, vol. 139(C), pages 18-21.
    10. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    11. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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    Citations

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    Cited by:

    1. Sebastian Link, 2019. "The Price and Employment Response of Firms to the Introduction of Minimum Wages," CESifo Working Paper Series 7575, CESifo Group Munich.
    2. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa, 2018. "The German minimum wage: Effects on business expectations, profitability, and investments," FAU Discussion Papers in Economics 13/2018, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. repec:bla:germec:v:20:y:2019:i:3:p:257-292 is not listed on IDEAS
    4. Marco Caliendo & Carsten Schröder & Linda Wittbrodt, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany – An Overview," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 257-292, August.
    5. Bonin, Holger & Isphording, Ingo E. & Krause-Pilatus, Annabelle & Lichter, Andreas & Pestel, Nico & Rinne, Ulf, 2019. "The German Statutory Minimum Wage and Its Effects on Regional Employment and Unemployment," IZA Policy Papers 145, Institute of Labor Economics (IZA).
    6. repec:ces:ifodic:v:16:y:2019:i:4:p:50000000004802 is not listed on IDEAS
    7. Marius Berger & Bruno Lanz, 2019. "Minimum wage regulation in Switzerland: Evidence from a direct-democracy experiment," IRENE Working Papers 19-01, IRENE Institute of Economic Research.
    8. repec:ces:ifodic:v:16:y:2019:i:04:p:14-18 is not listed on IDEAS
    9. 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.

    More about this item

    Keywords

    Difference-in-differences; Employment; Germany; Minimum wage;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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