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The Impact of the Minimum Wage on Initial Labour Market Outcomes

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  • Umkehrer, Matthias

    (Institute for Employment Research (IAB), Nuremberg, Germany ; Mannheim Centre for European Social Research (MZES), University of Mannheim)

Abstract

"In this paper, I study how the introduction of the nationwide minimum wage in Germany affects career outcomes of young workers who have just entered the labour market. The institutional setting, administrative micro data, and predicted minimum wage exposure allow estimating the causal effects of the policy by comparing cohorts initially affected by the minimum wage or not, while accounting for selection into educational track, endogenous timing of entry, changes in cohort composition, and macroeconomic conditions. Affected cohorts showed higher earnings, but no reduced employment. They worked somewhat more hours, were more likely to start careers at larger and higher-paying employers, less likely to perform occupations more exposed to the minimum wage, and less likely to carry out routine manual or menial tasks. According to these results, the minimum wage does not harm the education-to-work transition, but impacts the mix of both firms and occupations in the labour market." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Umkehrer, Matthias, 2025. "The Impact of the Minimum Wage on Initial Labour Market Outcomes," IAB-Discussion Paper 202516, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:202516
    DOI: 10.48720/IAB.DP.2516
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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