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Minimum Wages and Vocational Training Incentives in Germany

Author

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  • Kim Leonie Kellermann

    (University of Münster, Center for Interdisciplinary Economics, Münster, Germany)

Abstract

We examine the impact of sector-specific minimum wages in Germany on the willingness of youths to undergo vocational training. The theoretical intuition on the impact of wage floors on education is ambiguous. On the one hand, they raise the opportunity cost of education and prevent further skill accumulation. On the other hand, they lower the employment probability of unskilled workers, promoting additional training. Employing a mixed logit model, we estimate the probability of opting for an apprenticeship for a GSOEP-based sample of youths aged 17 to 24. Unlike the evidence from other countries, we find that increasing sectoral wage floors have a positive effect on training probabilities. Due to binding minimum wages, the demand for unskilled workers declines which lowers the opportunity cost of education. High requirements with regard to professional skills reinforce the effect.

Suggested Citation

  • Kim Leonie Kellermann, 2017. "Minimum Wages and Vocational Training Incentives in Germany," IAAEU Discussion Papers 201708, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    • Handle: RePEc:iaa:dpaper:201708
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    Citations

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    Cited by:

    1. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa, 2018. "The German minimum wage: Effects on business expectations, profitability, and investments," FAU Discussion Papers in Economics 13/2018, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. Bossler Mario & Gürtzgen Nicole & Betzl Ute & Feist Lisa & Lochner Benjamin, 2020. "The German Minimum Wage: Effects on Productivity, Profitability, and Investments," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 321-350, April.

    More about this item

    Keywords

    Minimum wages; education; vocational training; occupational choice; discrete choice;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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