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Wage Inequality in Germany after the Minimum Wage Introduction

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  • Mario Bossler
  • Thorsten Schank

Abstract

Monthly wage inequality in Germany continued to increase in the early 2000s, which is mainly explained by a rising part-time employment share. After 2010, inequality returned to the level of 2000. About half of the recent decrease is due to the introduction of the national minimum wage in 2015. While employment effects of the minimum wage are negligible, we find strong wage increases among the existing workforce. The minimum wage lowered wage inequality within eastern and western Germany but also led to a convergence of the east-west wage differential. The increased labor incomes were not offset by decreasing social benefits.

Suggested Citation

  • Mario Bossler & Thorsten Schank, 2023. "Wage Inequality in Germany after the Minimum Wage Introduction," Journal of Labor Economics, University of Chicago Press, vol. 41(3), pages 813-857.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/720391
    DOI: 10.1086/720391
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    Cited by:

    1. Marco Caliendo & Nico Pestel & Rebecca Olthaus, 2023. "Long-Term Employment Effects of the Minimum Wage in Germany: New Data and Estimators," Papers 2310.15964, arXiv.org.
    2. Biewen, Martin & Erhardt, Pascal, 2024. "Using Post-Regularization Distribution Regression to Measure the Effects of a Minimum Wage on Hourly Wages, Hours Worked and Monthly Earnings," IZA Discussion Papers 16894, Institute of Labor Economics (IZA).
    3. Bucher-Koenen, Tabea & Janssen, Bennet & Knebel, Caroline & Tzamourani, Panagiota, 2023. "Financial literacy, stock market participation, and financial well-being in Germany," ZEW Discussion Papers 23-071, ZEW - Leibniz Centre for European Economic Research.
    4. Arabzadeh, Hamzeh & Balleer, Almut & Gehrke, Britta & Taskin, Ahmet Ali, 2024. "Minimum wages, wage dispersion and financial constraints in firms," European Economic Review, Elsevier, vol. 163(C).
    5. Rodriguez, Francisco Javier Valverde, 2023. "The effects of Minimum Wage in the presence of Monopsonic power in Latin America: A study case for Mexico," SocArXiv 5x7uk, Center for Open Science.
    6. Riedel, Lukas, 2024. "Wage inequality consequences of expanding public childcare," ZEW Discussion Papers 24-006, ZEW - Leibniz Centre for European Economic Research.

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