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The Impact of the Minimum Wage on Working Hours

Author

Listed:
  • Burauel Patrick
  • Grabka Markus M.
  • Schröder Carsten

    (DIW Berlin/SOEP, Berlin, Germany)

  • Caliendo Marco

    (University of Potsdam, August-Bebel-Str. 89, 14482Potsdam, Germany)

  • Obst Cosima

    (University of Potsdam, Potsdam, Germany)

  • Preuss Malte

    (Free University Berlin, Berlin, Germany)

Abstract

The present paper analyzes how the statutory minimum wage introduced on January 1, 2015, has affected working hours in Germany up to 2016. The data used come from the Socio-Economic Panel (SOEP), which provides not only contractual working hours but also actual hours worked. Using a difference-in-differences estimation approach, we find a significant and robust reduction in contractual working hours among employees who are subject to social security contributions and earned less than the minimum wage before the introduction. The effect in 2015 is about −5 % and corresponds to a 1.7 hours reduction in average weekly working hours. The effect on actual hours is smaller and estimated less precisely. Extending the analysis until 2016 does not yield significant effects on contractual or actual working hours, while some specifications reject the common trend assumption.

Suggested Citation

  • Burauel Patrick & Grabka Markus M. & Schröder Carsten & Caliendo Marco & Obst Cosima & Preuss Malte, 2020. "The Impact of the Minimum Wage on Working Hours," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 233-267, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:233-267:n:6
    DOI: 10.1515/jbnst-2018-0081
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    References listed on IDEAS

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    Citations

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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. 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.
    3. Kunaschk, Max, 2024. "The effects of minimum wages on employment and prices—Evidence from the hairdressing sector," Labour Economics, Elsevier, vol. 88(C).
    4. Bonin, Holger & Pestel, Nico, 2020. "Der Mindestlohn birgt nach wie vor Beschäftigungsrisiken," IZA Standpunkte 98, Institute of Labor Economics (IZA).
    5. Biewen, Martin & Erhardt, Pascal, 2024. "Using Post-Regularization Distribution Regression to Measure the Effects of a Minimum Wage on Hourly Wages, Hours Worked and Monthly Earnings," IZA Discussion Papers 16894, Institute of Labor Economics (IZA).
    6. Schröder Carsten & König Johannes & Fedorets Alexandra & Goebel Jan & Grabka Markus M. & Lüthen Holger & Metzing Maria & Schikora Felicitas & Liebig Stefan, 2020. "The economic research potentials of the German Socio-Economic Panel study," German Economic Review, De Gruyter, vol. 21(3), pages 335-371, September.
    7. Arne Heise, 2022. "Mindestlöhne, Beschäftigung und die „Harmonie der Täuschungen“," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 48(1), pages 83-107.
    8. Mario Bossler & Lars Chittka & Thorsten Schank, 2024. "A 22 percent increase in the German minimum wage: nothing crazy!," Papers 2405.12608, arXiv.org, revised Jun 2024.
    9. Biewen, Martin & Fitzenberger, Bernd & Rümmele, Marian, 2022. "Using Distribution Regression Difference-in-Differences to Evaluate the Effects of a Minimum Wage Introduction on the Distribution of Hourly Wages and Hours Worked," IZA Discussion Papers 15534, Institute of Labor Economics (IZA).
    10. 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.

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    More about this item

    Keywords

    minimum wage; working hours; DiD estimation;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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