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The Impact of the German Minimum Wage on Individual Wages and Monthly Earnings

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  • Burauel, Patrick
  • Caliendo, Marco
  • Grabka, Markus M.
  • Obst, Cosima
  • Preuss, Malte
  • Schröder, Carsten
  • Shupe, Cortnie

Abstract

This paper evaluates the short-run impact of the introduction of a statutory minimum wage in Germany on the hourly wages and monthly earnings of workers targeted by the reform. We first provide detailed descriptive evidence of changes to the wage structure in particular at the bottom of the distribution and distinguish between trends for regularly employed and marginally employed workers. In the causal analysis, we then employ a differential trend adjusted difference-in-differences (DTADD) strategy to identify the extent to which these changes in wages and earnings can be attributed to the minimum wage introduction. We find that the minimum wage introduction can account for hourly wage growth in the order of roughly 6.5 % or €0.45/hour and an increase in monthly earnings of 6.6 % or €53/month. Despite finding wage growth at the bottom of the distribution, the paper documents widespread non-compliance with the mandated wage floor of €8.50/hour.

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  • Burauel, Patrick & Caliendo, Marco & Grabka, Markus M. & Obst, Cosima & Preuss, Malte & Schröder, Carsten & Shupe, Cortnie, 2020. "The Impact of the German Minimum Wage on Individual Wages and Monthly Earnings," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 240(2/3), pages 201-231.
    • Handle: RePEc:zbw:espost:215497
    DOI: 10.1515/jbnst-2018-0077
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    Cited by:

    1. Caliendo, Marco & Wittbrodt, Linda, 2022. "Did the minimum wage reduce the gender wage gap in Germany?," Labour Economics, Elsevier, vol. 78(C).
    2. Burauel Patrick & Caliendo Marco & Grabka Markus M. & Obst Cosima & Preuss Malte & Schröder Carsten, 2020. "The Impact of the Minimum Wage on Working Hours," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 233-267, April.
    3. Gerlinde Titelbach & Martin Ertl & Susanne Forstner, 2024. "Allgemeine Lohnuntergrenzen für Österreich, Betroffene, Verteilungswirkungen und makroökonomische Konsequenzen," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 251, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    4. Heiko Stüber & Markus M. Grabka & Daniel D. Schnitzlein, 2023. "A tale of two data sets: comparing German administrative and survey data using wage inequality as an example," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-18, December.
    5. 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.
    6. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2023. "The short- and medium-term distributional effects of the German minimum wage reform," Empirical Economics, Springer, vol. 64(3), pages 1149-1175, March.
    7. Ayaita, Adam, 2022. "Does Money Change Who You Are? Quasi-Experimental Evidence on the Effects of Wage Increases on Personality," EconStor Preprints 256931, ZBW - Leibniz Information Centre for Economics.

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    More about this item

    Keywords

    Minimum wage; Wage and earnings structure; Inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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