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Reallocation Effects of the Minimum Wage

Author

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  • Christian Dustmann
  • Attila Lindner
  • Uta Schönberg
  • Matthias Umkehrer
  • Philipp vom Berge

Abstract

We investigate the wage, employment, and reallocation effects of the introduction of a nationwide minimum wage in Germany that affected 15% of all employees. Based on identification designs that exploit variation in exposure across individuals and local areas, we find that the minimum wage raised wages but did not lower employment. It also led to the reallocation of low-wage workers from smaller to larger, from lower- to higher-paying, and from less to more productive establishments. This worker upgrading accounts for up to 17% of the wage increase induced by the minimum wage. Moreover, at the regional level, average establishment quality increased in more affected areas in the years following the introduction of the minimum wage.

Suggested Citation

  • Christian Dustmann & Attila Lindner & Uta Schönberg & Matthias Umkehrer & Philipp vom Berge, 2022. "Reallocation Effects of the Minimum Wage," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(1), pages 267-328.
    • Handle: RePEc:oup:qjecon:v:137:y:2022:i:1:p:267-328.
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    File URL: http://hdl.handle.net/10.1093/qje/qjab028
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