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Characteristics Contributing to Low- and Minimum-Wage Labour in Germany

Author

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  • Dütsch Matthias

    (Institut of Sociology and Coordination and Information Office of the Minimum Wage Commission, c/o Federal Institute for Occupational Safety and Health, Freie Universität Berlin, Nöldnerstr. 40–42, 10317Berlin, Germany)

  • Himmelreicher Ralf

    (Institut of Sociology and Coordination and Information Office of the Minimum Wage Commission, c/o Federal Institute for Occupational Safety and Health, Freie Universität Berlin, Nöldnerstr. 40–42, 10317Berlin, Germany)

Abstract

In this article we examine the correlation between characteristics of individuals, companies, and industries involved in low-wage labour in Germany and the risks workers face of earning hourly wages that are below the minimum-wage or low-wage thresholds. To identify these characteristics, we use the Structure of Earnings Survey (SES) 2014. The SES is a mandatory survey of companies which provides information on wages and working hours from about 1 million jobs and nearly 70,000 companies from all industries. This data allows us to present the first systematic analysis of the interaction of individual-, company-, and industry-level factors on minimum- and low-wage working in Germany. Using a descriptive analysis, we first give an overview of typical low-paying jobs, companies, and industries. Second, we use random intercept-only models to estimate the explanatory power of the individual, company, and industry levels. One main finding is that the influence of individual characteristics on wage levels is often overstated: Less than 25 % of the differences in the employment situation regarding being employed in minimum-wage or low-wage jobs can be attributed to the individual level. Third, we performed logistic and linear regression estimations to assess the risks of having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum- or low-wage thresholds. Our findings allow us to conclude that several determinants related to individuals appear to suggest a high low-wage incidence, but in fact lose their explanatory power once controls are added for factors relating to the companies or industries that employ these individuals.

Suggested Citation

  • Dütsch Matthias & Himmelreicher Ralf, 2020. "Characteristics Contributing to Low- and Minimum-Wage Labour in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 161-200, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:161-200:n:1
    DOI: 10.1515/jbnst-2018-0076
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    2. Johannes Geyer & Ralf Himmelreicher, 2021. "Charakteristika der Entgeltumwandlung: Wer sorgt in welchem Umfang für das Alter vor?," Discussion Papers of DIW Berlin 1929, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    hourly wages; low wage; minimum wage; wage differentials; social inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights

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