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Employment effects of the new German minimum wage: Evidence from establishment-level micro data

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  • Bossler, Mario
  • Gerner, Hans-Dieter

Abstract

In Germany a new statutory minimum wage of € 8.50 per hour of work was introduced on 1 January 2015. We identify employment effects using variation in the establishment-level affectedness. The data allow addressing anticipatory wage adjustments as well as spillover effects within and across workplaces. Difference-in-differences estimation reveals an increase in average wages by 4.8 percent and an employment reduction by about 1.9 percent in affected establishments. These estimates imply an employment elasticity with respect to wages of about -0.3. Looking at the associated labor flows, the employment effect seems mostly driven by a reduction in hires but also by a small increase in separations. Moreover, the employment neutral turnover rate decreases. When analyzing alternative adjustment margins, we observe a reduction in the typical contracted working hours but no effects on freelance employment.

Suggested Citation

  • Bossler, Mario & Gerner, Hans-Dieter, 2016. "Employment effects of the new German minimum wage: Evidence from establishment-level micro data," Annual Conference 2016 (Augsburg): Demographic Change 145926, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145926
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    Cited by:

    1. Caliendo, Marco & Fedorets, Alexandra & Preuß, Malte & Schröder, Carsten & Wittbrodt, Linda, 2017. "The Short-Run Employment Effects of the German Minimum Wage Reform," IZA Discussion Papers 11190, Institute for the Study of Labor (IZA).
    2. repec:bla:scotjp:v:64:y:2017:i:4:p:327-348 is not listed on IDEAS
    3. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2017. "The Short-Term Distributional Effects of the German Minimum Wage Reform," SOEPpapers on Multidisciplinary Panel Data Research 948, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. repec:spr:izalbr:v:6:y:2017:i:1:d:10.1186_s40172-017-0058-z is not listed on IDEAS
    5. repec:bla:labour:v:31:y:2017:i:4:p:480-493 is not listed on IDEAS
    6. Schmitz, Sebastian, 2017. "The effects of Germany's new minimum wage on employment and welfare dependency," Discussion Papers 2017/21, Free University Berlin, School of Business & Economics.
    7. repec:spr:qualqt:v:52:y:2018:i:2:d:10.1007_s11135-017-0495-6 is not listed on IDEAS
    8. Bossler, Mario & Broszeit, Sandra, 2016. "Do minimum wages increase job satisfaction? : micro data evidence from the new German minimum wage," IAB Discussion Paper 201615, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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