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Potential Effects of Statutory Minimum Wage on the Gender Pay Gap: A Simulation-Based Study for Germany

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  • Christina Boll
  • Hendrik Hüning
  • Julian Leppin
  • Johannes Puckelwald

Abstract

In a simulation-based study with data from the German Socio-Economic Panel Study (SOEP), we analyze the effects of the newly introduced statutory minimum wage of 8.50 Euro per working hour in Germany on the gender wage gap. In our first scenario where we abstain from employment effects, the pay differential is reduced by 2.5 percentage points from 19.6 % to 17.1 %, due to a reduction of the sticky-floor effect at the bottom of the wage distribution. In more realistic scenarios where we incorporate minimum wage effects on labor demand, a further reduction of the pay gap by 0.2 pp (1.2 pp) in case of a monopsonistic (neoclassical) labor market is achieved. However, this comes at the cost of job losses by which women are more strongly affected than men. The magnitude of job losses ranges be-tween 0.2 % and 3.0 % of all employees. It is higher in a neoclassical market setting and positively related to the assumed wage elasticity.

Suggested Citation

  • Christina Boll & Hendrik Hüning & Julian Leppin & Johannes Puckelwald, 2015. "Potential Effects of Statutory Minimum Wage on the Gender Pay Gap: A Simulation-Based Study for Germany," SOEPpapers on Multidisciplinary Panel Data Research 766, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp766
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    Cited by:

    1. Boll Christina & Wolf André & Rossen Anja, 2017. "The EU Gender Earnings Gap: Job Segregation and Working Time as Driving Factors," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(5), pages 407-452, October.
    2. Aksoy, Cevat Giray & Özcan, Berkay & Philipp, Julia, 2021. "Robots and the gender pay gap in Europe," European Economic Review, Elsevier, vol. 134(C).
    3. Majchrowska, Aleksandra & Strawiński, Paweł, 2018. "Impact of minimum wage increase on gender wage gap: Case of Poland," Economic Modelling, Elsevier, vol. 70(C), pages 174-185.

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    More about this item

    Keywords

    Minimum wage; labor demand; wage elasticity; gender pay gap; monopsony;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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