The Causal Effects of the Minimum Wage Introduction in Germany: An Overview

Aufsätze referiert extern - Web of Science

Marco Caliendo, Carsten Schröder, Linda Wittbrodt

In: German Economic Review 20 (2019), 3, S. 257-292


In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short‐run effects of this new minimum wage on a wide set of socioeconomic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self‐employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non‐compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low‐wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialised in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non‐compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide reaching policy.

Carsten Schröder

Vize-Direktor SOEP und Bereichsleitung Angewandte Panelanalysen in der Infrastruktureinrichtung Sozio-oekonomisches Panel

JEL-Classification: J22;J23;J31;J38
Keywords: Minimum wage, evaluation, earnings, working hours, employment