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

Author

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  • 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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    Citations

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    Cited by:

    1. Petri Böckerman & Toni Juuti & Tuomas Kosonen & Henri Keränen, 2024. "Are Firms Willing to Pay Lower Wages? A Quasi-Experiment on Subminimum Wage Policy," Working Papers 348, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    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. Arindrajit Dube & Attila S. Lindner, 2024. "Minimum Wages in the 21st Century," NBER Working Papers 32878, National Bureau of Economic Research, Inc.

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