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Evaluating the German 'Mini-Job' reform using a natural experiment

  • Marco Caliendo
  • Katharina Wrohlich

Increasing work incentives for people with low income is a common topic in the policy debate across European countries. The 'Mini-Job' reform in Germany had a similar motivation. We carry out an ex-post evaluation to identify the short-run effects of this reform. Our identification strategy uses an exogenous variation in the interview months in the Socio-Economic Panel Study (SOEP), which allows us to distinguish groups that are affected by the reform from those who are not. To account for seasonal effects we additionally use a Difference-In-Differences (DID) strategy. Descriptives show that there is a post-reform increase in the number of mini-jobs. However, we show that this increase cannot be causally related to the reform, since the short-run effects are very limited. Only single men seem to react immediately and increase secondary job holding.

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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 42 (2010)
Issue (Month): 19 ()
Pages: 2475-2489

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Handle: RePEc:taf:applec:v:42:y:2010:i:19:p:2475-2489
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  1. Robert Moffitt, 2002. "Welfare Programs and Labor Supply," NBER Working Papers 9168, National Bureau of Economic Research, Inc.
  2. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  3. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  4. Jürgen Schupp & Elisabeth Birkner, 2004. "Kleine Beschäftigungsverhältnisse: kein Jobwunder: dauerhafter Rückgang von Zweitbeschäftigungen?," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 71(34), pages 487-497.
  5. Blundell, Richard, 2000. "Work Incentives and 'In-Work' Benefit Reforms: A Review," Oxford Review of Economic Policy, Oxford University Press, vol. 16(1), pages 27-44, Spring.
  6. Kristian Orsini, 2006. "Tax-benefits reforms and the labor market: evidence from Belgium and other EU countries," Center for Economic Studies - Discussion papers ces0606, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  7. Scholz, John Karl, 1996. "In-Work Benefits in the United States: The Earned Income Tax Credit," Economic Journal, Royal Economic Society, vol. 106(434), pages 156-69, January.
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