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Building the Minimum Wage: Germany's First Sectoral Minimum Wage and Its Impact on Wages in the Construction Industry

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  • Pia Rattenhuber

Abstract

The very first minimum wage in Germany was introduced in 1997 for blue-collar workers in sub-sectors of the construction industry. In the setting of a natural experiment blue-collar workers in neighboring 4-digit-industries and white-collar workers are used as control groups for differences-in-differences-in-differences estimation based on linked employer-employee data. Estimation results reveal a sizable positive average impact on wages in East Germany and no effect in West Germany. Size and significance of effects are not homogeneous across wage regimes (individual vs. collective contracts) and across the distribution suggesting spillover effects to wages where the minimum is not binding.

Suggested Citation

  • Pia Rattenhuber, 2011. "Building the Minimum Wage: Germany's First Sectoral Minimum Wage and Its Impact on Wages in the Construction Industry," Discussion Papers of DIW Berlin 1111, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1111
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    More about this item

    Keywords

    Minimum wage; construction sector; linked employer-employee data; differences-in-differences-in-differences; unconditional quantile regression;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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