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The Short-Run Employment Effects of the German Minimum Wage Reform

Referierte Aufsätze Web of Science

Marco Caliendo, Alexandra Fedorets, Malte Preuss, Carsten Schröder, Linda Wittbrodt

In: Labour Economics 53 (2018), S. 46-62


We assess the short-term employment effects of the introduction of a national statutory minimum wage in Germany in 2015. For this purpose, we exploit variation in the regional treatment intensity, assuming that the stronger a minimum wage ‘bites’ into the regional wage distribution, the stronger the regional labour market will be affected. In contrast to previous studies, we construct two regional bite indicators based upon detailed individual wage data from the Structure of Earnings Survey (SES) 2014 and combine it with administrative information on regional employment. Moreover, using the Socio-Economic Panel (SOEP), we are able to affirm the absence of anticipation effects and verify the assumption of a common trend in wages before the reform. In sum, we find only moderate negative effects on overall employment of about 140,000 (0.4%) jobs, which are mainly driven by a sharp decline of marginal employment (‘mini-jobs’), while we do not find pronounced significant effects for regular employment in most specifications. Our results are robust to a variety of sensitivity tests.

Carsten Schröder

Board of Directors SOEP and Division Head Applied Panel Analysis in the German Socio-Economic Panel study Department

JEL-Classification: J23;J31;J38
Keywords: Minimum wage, Regional bite, Employment effects