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Evaluating the Minimum-Wage Exemption of the Long-Term Unemployed in Germany

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Listed:
  • Matthias Umkehrer
  • Philipp vom Berge

Abstract

The authors evaluate the exemption of long-term unemployed job seekers from Germany’s national minimum wage. Using linked survey and administrative micro data, they rely on a regression discontinuity design to identify the effects of the policy by comparing hiring rates, employment stability, and entry wages around the administrative threshold between short-term and long-term unemployment. They find that the exemption is very rarely used and that the minimum wage binds irrespective of past unemployment duration. While the minimum wage led to a relative rise in entry wages for the long-term unemployed compared to the short-term unemployed, the authors do not detect a relative deterioration in their employment prospects.

Suggested Citation

  • Matthias Umkehrer & Philipp vom Berge, 2020. "Evaluating the Minimum-Wage Exemption of the Long-Term Unemployed in Germany," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1095-1118, October.
    • Handle: RePEc:sae:ilrrev:v:73:y:2020:i:5:p:1095-1118
    DOI: 10.1177/0019793920907036
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    References listed on IDEAS

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    Cited by:

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    2. Blömer, Maximilian J. & Guertzgen, Nicole & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard J., 2024. "Unemployment effects of the German minimum wage in an equilibrium job search model," Labour Economics, Elsevier, vol. 91(C).
    3. Lawrence M. Kahn, 2020. "Editorial Essay: Introduction to a Special Collection on European Labor Markets in Flux: The German Experience," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1040-1045, October.
    4. Arindrajit Dube & Attila Lindner, 2024. "Minimum Wages in the 21st Century," RFBerlin Discussion Paper Series 2425, ROCKWOOL Foundation Berlin (RFBerlin).

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