IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v245y2025i1-2p7-44n1004.html
   My bibliography  Save this article

What Explains Differences in Minimum Wage Growth Between EU Member States?

Author

Listed:
  • Baumann Arne

    (Federal Institute for Occupational Safety and Health (BAuA), Noeldnerstrasse 40-42, 10317 Berlin, Germany)

Abstract

There are considerable differences in minimum wage growth between EU member states with national minimum wages. Potential sources for these differences are discrepancies in economic fundamentals and institutional differences in how minimum wages are adjusted. Using a novel dataset based on macroeconomic data, institutional information on minimum wage setting and data on economic policy orientation and elections, the article tests whether growth differences in the minimum wage of 21 EU member states during the time period 2000 to 2020 can be explained by a catch-up dynamic in new EU member states, by different growth models of EU member states or by differences in the actors that are responsible for the adjustment of minimum wages. The results show that across the entire sample and irrespective of actors, minimum wage growth follows consumer price inflation and wage growth most closely. Higher than average minimum wage growth rates in EU member states stem from overshooting inflation during the period of EU accession, reducing wage inequality and increasing the Kaitz index. Actors also mattered for minimum wage growth. Adjustments by social partner consensus led to higher minimum wage growth than the benchmark of indexed minimum wages, introducing a distributive element to minimum wage adjustments.

Suggested Citation

  • Baumann Arne, 2025. "What Explains Differences in Minimum Wage Growth Between EU Member States?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 245(1-2), pages 7-44.
    • Handle: RePEc:jns:jbstat:v:245:y:2025:i:1-2:p:7-44:n:1004
    DOI: 10.1515/jbnst-2023-0039
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2023-0039
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2023-0039?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Andrea Garnero & Stephan Kampelmann & François Rycx, 2013. "Minimum Wage Systems and Earnings Inequalities:Does Institutional Diversity Matter?," DULBEA Working Papers 13-06, ULB -- Universite Libre de Bruxelles.
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. Scharpf, Fritz W., 2002. "The European Social Model: Coping with the challenges of diversity," MPIfG Working Paper 02/8, Max Planck Institute for the Study of Societies.
    4. Lucian Cernat, 2006. "Europeanization, Varieties of Capitalism and Economic Performance in Central and Eastern Europe," Studies in Economic Transition, Palgrave Macmillan, number 978-0-230-50168-3, February.
    5. Cinzia Alcidi, 2019. "Economic Integration and Income Convergence in the EU," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(1), pages 5-11, January.
    6. Anke Hassel, 2014. "The Paradox of Liberalization — Understanding Dualism and the Recovery of the German Political Economy," British Journal of Industrial Relations, London School of Economics, vol. 52(1), pages 57-81, March.
    7. Peter Harasztosi & Attila Lindner, 2019. "Who Pays for the Minimum Wage?," American Economic Review, American Economic Association, vol. 109(8), pages 2693-2727, August.
    8. Bruno Palier & Kathleen Thelen, 2010. "Institutionalizing Dualism: Complementarities and Change in France and Germany," Politics & Society, , vol. 38(1), pages 119-148, March.
    9. Fritz W. Scharpf, 2002. "The European Social Model," Journal of Common Market Studies, Wiley Blackwell, vol. 40(4), pages 645-670, November.
    10. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-649, May.
    11. Anke Hassel & Bruno Palier & Sonja Avlijaš, 2020. "The pursuit of growth. Growth regimes, growth strategies and welfare reforms in advanced capitalist economies," Stato e mercato, Società editrice il Mulino, issue 1, pages 41-77.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sarah Marchal & Ive Marx, 2015. "Stemming the tide. What have EU countries done to support low-wage workers in an era of downward wage pressure?," ImPRovE Working Papers 15/18, Herman Deleeck Centre for Social Policy, University of Antwerp.
    2. Baptiste Françon, 2021. "Salaire minimum en Allemagne et segmentation de l’emploi," Working Papers halshs-03217241, HAL.
    3. Baptiste Françon, 2020. "Salaire minimum en Allemagne et segmentation de l’emploi," Post-Print halshs-03217241, HAL.
    4. Donato Di Carlo & Christian Lyhne Ibsen & Oscar Molina, 2024. "The new political economy of public sector wage-setting in Europe: Introduction to the special issue," European Journal of Industrial Relations, , vol. 30(1), pages 5-30, March.
    5. Vit Hradil, 2018. "Does Minimum Wage Affect Workplace Safety?," CERGE-EI Working Papers wp615, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. José Azar & Emiliano Huet & Ioana Marinescu & Bledi Taska & Till von, 2024. "Minimum Wage Employment Effects and Labour Market Concentration," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(4), pages 1843-1883.
    7. Eloi Laurent & Jacques Le Cacheux, 2006. "Integrity and Efficiency in the EU: The Case against the European economic constitution," Working Papers hal-00972707, HAL.
    8. Catherine Mathieu & Henri Sterdyniak, 2008. "European social model(s) and social Europe," Working Papers hal-00973054, HAL.
    9. Arindrajit Dube & Attila S. Lindner, 2024. "Minimum Wages in the 21st Century," NBER Working Papers 32878, National Bureau of Economic Research, Inc.
    10. Dütsch Matthias & Ohlert Clemens & Baumann Arne, 2025. "The Minimum Wage in Germany: Institutional Setting and a Systematic Review of Key Findings," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 245(1-2), pages 113-151.
    11. Dorte Sindbjerg Martinsen & Gabriel Pons Rotger, 2017. "The fiscal impact of EU immigration on the tax-financed welfare state: Testing the ‘welfare burden’ thesis," European Union Politics, , vol. 18(4), pages 620-639, December.
    12. Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-31, December.
    13. Adamopoulou, Effrosyni & Manaresi, Francesco & Rachedi, Omar & Yurdagul, Emircan, 2021. "Minimum Wages and Insurance within the Firm," IZA Discussion Papers 14943, Institute of Labor Economics (IZA).
    14. Mayneris, Florian & Poncet, Sandra & Zhang, Tao, 2018. "Improving or disappearing: Firm-level adjustments to minimum wages in China," Journal of Development Economics, Elsevier, vol. 135(C), pages 20-42.
    15. Neumark David, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, De Gruyter, vol. 20(3), pages 293-329, August.
    16. Van Vliet, Olaf & Kaeding, Michael, 2007. "Globalisation, European Integration and Social Protection – Patterns of Change or Continuity?," MPRA Paper 20808, University Library of Munich, Germany.
    17. Cal Le Gall & Corentin Poyet, 2017. "The effect of supranational economic constraints on MPs issue attention: the case of France," Post-Print hal-01542581, HAL.
    18. Brian Burgoon, 2009. "Social Nation and Social Europe," European Union Politics, , vol. 10(4), pages 427-455, December.
    19. Golan, Amos & Perloff, Jeffrey M. & Wu, Ximing, 2001. "Welfare Effects of Minimum Wage and Other Government Policies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0gb7h58q, Department of Agricultural & Resource Economics, UC Berkeley.
    20. Giulia Giupponi & Stephen Machin, 2018. "Changing the structure of minimum wages: firm adjustment and wage spillovers," CEP Discussion Papers dp1533, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:245:y:2025:i:1-2:p:7-44:n:1004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyterbrill.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.