Minimum wages and competition: The case of the German roofing sector
This paper analyses the effects of minimum wages on competition in the German roofing sector. The case is particularly interesting since this sector is faced with a uniform minimum wage despite significant regional disparities in productivity and wages. As a control industry we take the plumbing sector, which shows a similar market structure and demand trend but is not subject to a minimum wage. Employing a comprehensive firm panel data and using a difference-in-difference approach, we estimate the impacts of minimum wages on market entries and exits and firms' profitability. We find significant effects for East Germany which point to a substantial shift in industry structure. Minimum wages decreased both market entries and exits for roofing firms while they increased entries of sole traders. A decreasing number of non-sole traders lowered competition for this group of firms and helped them to increase profitability. The increasing share of sole traders may indicate some type of evasion strategy in eastern Germany, particularly since wages for skilled roofers declined towards the minimum wage. In the western part of the country minimum wages had no impact on competition.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.zew.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guimaraes, Paulo & Mata, José & Portugal, Pedro, 1995.
"The Survival of New Plants: Start-up Conditions and Post-entry Evolution,"
CEPR Discussion Papers
1203, C.E.P.R. Discussion Papers.
- Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
- Mark B. Stewart, 2002.
"Estimating the Impact of the Minimum Wage Using Geographical Wage Variation,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 64(s1), pages 583-605, 08.
- Stewart, Mark B, 2002. " Estimating the Impact of the Minimum Wage Using Geographical Wage Variation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(0), pages 583-605, Supplemen.
- Daniel Aaronson, 2001. "Price Pass-Through And The Minimum Wage," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 158-169, February.
- Daniel Aaronson & Eric French, 2003.
"Product market evidence on the employment effects of the minimum wage,"
Working Paper Series
WP-03-17, Federal Reserve Bank of Chicago.
- Daniel Aaronson & Eric French, 2007. "Product Market Evidence on the Employment Effects of the Minimum Wage," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 167-200.
- Eric French & Dan Aaronson, 2004. "Product Market Evidence on the Employment Effects of the Minimum Wage," Econometric Society 2004 North American Summer Meetings 549, Econometric Society.
- repec:cup:cbooks:9780521016919 is not listed on IDEAS
- Enrico Santarelli & Marco Vivarelli, 2007.
"Entrepreneurship and the process of firms’ entry, survival and growth,"
Industrial and Corporate Change,
Oxford University Press, vol. 16(3), pages 455-488, June.
- Santarelli, Enrico & Vivarelli, Marco, 2006. "Entrepreneurship and the Process of Firms’ Entry, Survival and Growth," IZA Discussion Papers 2475, Institute for the Study of Labor (IZA).
- Justus Haucap & Uwe Pauly & Christian Wey, 2000.
"Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective,"
CIG Working Papers
FS IV 00-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Haucap, Justus & Pauly, Uwe & Wey, Christian, 2001. "Collective wage setting when wages are generally binding An antitrust perspective," International Review of Law and Economics, Elsevier, vol. 21(3), pages 287-307, September.
- Justus Haucap & Christian Wey & Uwe Pauly, 1999. "The Incentives of Employers’ Associations to Raise Rivals’ Costs in the Presence of Collective Bargaining," CIG Working Papers FS IV 99-06, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Czarnitzki, Dirk & Kraft, Kornelius, 2004. "Innovation indicators and corporate credit ratings: evidence from German firms," Economics Letters, Elsevier, vol. 82(3), pages 377-384, March.
- Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004.
"Evaluating the Employment Impact of a Mandatory Job Search Program,"
Journal of the European Economic Association,
MIT Press, vol. 2(4), pages 569-606, 06.
- Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers 3786, C.E.P.R. Discussion Papers.
- Daniel Aaronson & Eric French & James MacDonald, 2008. "The Minimum Wage, Restaurant Prices, and Labor Market Structure," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 688-720.
- Aretz, Bodo & Arntz, Melanie & Gregory, Terry, 2012.
"The minimum wage affects them all: Evidence on employment spillovers in the roofing sector,"
ZEW Discussion Papers
12-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- 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, 08.
- Aretz, Bodo & Arntz, Melanie & Gregory, Terry, 2012. "The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector," IZA Discussion Papers 7047, Institute for the Study of Labor (IZA).
- Schmalensee, Richard, 1985.
"Do Markets Differ Much?,"
American Economic Review,
American Economic Association, vol. 75(3), pages 341-51, June.
- Göddeke, Anna & Haucap, Justus & Herr, Annika & Wey, Christian, 2011. "Stabilität und Wandel von Arbeitsmarktinstitutionen aus wettbewerbsökonomischer Sicht," DICE Ordnungspolitische Perspektiven 10, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
- Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
- Emmanuel Petrakis & Minas Vlassis, 2004. "The Political Economy of the "Minimum-Wage Institution" in an Internationally Integrated Market," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 27-40, 02.
- Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
- Stephen Machin & Alan Manning & Lupin Rahman, 2003. "Where the Minimum Wage Bites Hard: Introduction of Minimum Wages to a Low Wage Sector," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 154-180, 03.
- repec:cup:cbooks:9780521816632 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:12083. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.