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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.

Suggested Citation

  • 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, pages 201-231.
  • Handle: RePEc:zbw:espost:215497
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    References listed on IDEAS

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    Cited by:

    1. Marco Caliendo & Linda Wittbrodt, 2021. "Did the Minimum Wage Reduce the Gender Wage Gap in Germany?," CEPA Discussion Papers 40, Center for Economic Policy Analysis.
    2. Schank, Thorsten & Bossler, Mario, 2020. "Wage inequality in Germany after the minimum wage introduction," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224543, Verein für Socialpolitik / German Economic Association.

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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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