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The German Statutory Minimum Wage and Its Effects on Regional Employment and Unemployment

Author

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  • Bonin Holger
  • Isphording Ingo E.
  • Krause-Pilatus Annabelle
  • Pestel Nico
  • Rinne Ulf

    (IZA – Institute of Labor Economics, Schaumburg-Lippe-Str. 5–9, 53113Bonn, Germany)

  • Lichter Andreas

    (Heinrich-Heine University Düsseldorf and Düsseldorf Institute for Competition Economics (DICE), Düsseldorf, Germany)

Abstract

This paper studies the effects of the introduction of Germany’s statutory minimum wage in 2015 on employment and unemployment on the level of regional labor markets. Using variation in the regional exposure to the new wage floor, we employ a difference-in-differences approach that compares the evolution of employment and unemployment between regions with varying minimum wage bites. Overall, we find no statistically significant effect of the introduction of the German minimum wage on regular employment subject to social insurance, but a statistically significant negative effect on marginal employment. The reduction is not accompanied by a proportional increase in unemployment.

Suggested Citation

  • Bonin Holger & Isphording Ingo E. & Krause-Pilatus Annabelle & Pestel Nico & Rinne Ulf & Lichter Andreas, 2020. "The German Statutory Minimum Wage and Its Effects on Regional Employment and Unemployment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 295-319, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:295-319:n:1
    DOI: 10.1515/jbnst-2018-0067
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    1. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Boockmann, Bernhard & Kirchmann, Andrea & Kleinemeier, Rita & Krause-Pilatus, Annabelle & Maier, Anastasia & Nottmeyer, Olga & Reiner, Marcel & Schafstädt, Christin & Scheu, Tobias & Zühlke, Anne & Bo, 2021. "Allgemeiner gesetzlicher Mindestlohn: seine Kontrolle und Durchsetzung sowie bürokratische Kosten für Arbeitgeber," IZA Research Reports 106, Institute of Labor Economics (IZA).
    3. Bonin, Holger & Pestel, Nico, 2020. "Der Mindestlohn birgt nach wie vor Beschäftigungsrisiken," IZA Standpunkte 98, Institute of Labor Economics (IZA).
    4. Mario Bossler & Michael Oberfichtner & Claus Schnabel, 2020. "Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights From a Survey Experiment," LABOUR, CEIS, vol. 34(3), pages 323-346, September.
    5. Bossler, Mario & Westermeier, Christian, 2020. "Measurement error in minimum wage evaluations using survey data," IAB-Discussion Paper 202011, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Börschlein, Erik-Benjamin & Bossler, Mario, 2019. "Eine Bilanz nach fünf Jahren gesetzlicher Mindestlohn: Positive Lohneffekte, kaum Beschäftigungseffekte (Five Years of statutory minimum wage in Germany: Significant wage effects, barely any employmen," IAB-Kurzbericht 201924, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Andreas Knabe & Ronnie Schöb & Marcel Thum & Bruttel,Oliver & Benjamin Börschlein & Bossler Mario & Felix Pakleppa & Holger Bonin & Nico Pestel & Alexandra Fedorets & Marco Caliendo, 2020. "Balance after Five Years: What Has the Legal Minimum Wage Achieved?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(04), pages 03-28, April.
    8. Friedrich Martin, 2020. "Using Occupations to Evaluate the Employment Effects of the German Minimum Wage," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 269-294, April.

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    More about this item

    Keywords

    minimum wage; employment; unemployment; labor market regions; Germany;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • 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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