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Rather a trigger than a cause of change.Responses of firms and workers to the statutory minimum wage in Germany

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Abstract

The introduction of the statutory minimum wage in Germany directly affected firms with wage earners paid less than EUR 8.50 per hour. This paper studies a variety of responses by employers and employees to adapt to this shock, in particular changes in compensation packages, employment at the extensive and intensive margin, working conditions, and position in product markets. Strategies of non-compliance are also in focus. The analysis is qualitative and based on 131 semi-structured, in-depth interviews with firm representatives, workers and members of work councils. A key finding is that while many firms and workers changed behavior with the introduction of the minimum wage, these changes are less response to concomitant changes in labor costs. Rather, it appears that the reform at many workplaces served as a catalyst to trigger or accelerate pending change processes.

Suggested Citation

  • Andreas Koch & Andrea Kirchmann & Marcel Reiner & Tobias Scheu & Holger Bonin, 2018. "Rather a trigger than a cause of change.Responses of firms and workers to the statutory minimum wage in Germany," IAW Discussion Papers 132, Institut für Angewandte Wirtschaftsforschung (IAW).
  • Handle: RePEc:iaw:iawdip:132
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    File URL: http://www.iaw.edu/RePEc/iaw/pdf/iaw_dp_132.pdf
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    1. Sara Lemos, 2008. "A Survey Of The Effects Of The Minimum Wage On Prices," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 187-212, February.
    2. Mario Bossler & Sandra Broszeit, 2017. "Do minimum wages increase job satisfaction? Micro-data evidence from the new German minimum wage," LABOUR, CEIS, vol. 31(4), pages 480-493, December.
    3. Patrick Burauel & Marco Caliendo & Alexandra Fedorets & Markus M. Grabka & Carsten Schröder & Jürgen Schupp & Linda Wittbrodt, 2017. "Mindestlohn noch längst nicht für alle – Zur Entlohnung anspruchsberechtigter Erwerbstätiger vor und nach der Mindestlohnreform aus der Perspektive Beschäftigter," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 84(49), pages 1109-1123.
    4. Bodo Aretz & Melanie Arntz & Terry Gregory, 2013. "The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector," German Economic Review, Verein für Socialpolitik, vol. 14(3), pages 282-315, August.
    5. Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2012. "Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State," ILR Review, Cornell University, ILR School, vol. 65(2), pages 350-376, April.
    6. Thomas R. Michl, 2000. "Can Rescheduling Explain the New Jersey Minimum Wage Studies?," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 265-276, Summer.
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    9. Stefan Sauer & Przemyslaw Wojciechowski & Przemyslaw Brandt, 2016. "Wie reagierten die deutschen Firmen auf die Einführung des Mindestlohns?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(07), pages 62-64, April.
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    11. Kosali Ilayperuma Simon & Robert Kaestner, 2003. "Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions," NBER Working Papers 9688, National Bureau of Economic Research, Inc.
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    Keywords

    Minimum wage; Interview-based approach; Germany;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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