Impact of the Introduction of the Legal Minimum Wage in Germany on Training Opportunities on the Workplace

Abstract

The dissertation is examining training outcomes of the legal minimum wage in Germany. Human capital theory, labor market segmentation theory and labor economic approach constitute the framework of the analysis. We employ a quasi-experimental research design on the basis of the German Socio-Economic Panel for the survey years 2014 to 2016. Measuring the dependent variable, we differentiate between training incidence and intensity. Firm-level, individual-level job-related, performance-related and personal characteristics are introduced as regressors. For the treatment assignment, we use a subjective assessment derived from the branch tariff adjustment which allows differentiating between employees who have received a pay raise within the juridically prescribed period and those covered by the anticipatory wage adjustments. The analysis is performed using Random Effects Logit and First Differences Regression models and followed by the robustness check in the variety of post-estimation procedures. Our findings prove the fact that it is the wage adjustment point, and not the absolute sum of the income, that regulate human capital investments on the minimum wage labor market. The results imply that the law introduction has a moderate positive impact on training participation of the affected workers, which is further specified dependently on the choice of the outcome indicator. In particular, we find no statistically significant time trends for the training incidence within the observation period and attribute it to the inter-compensation between the shares of training costs bearers. Second, our findings imply that the announcement upon the minimum wage introduction induces a further increase in the employer-financed training incidence prior to the law implementation. Third, we detect an upward adjustment in the number of enrollments after the minimum wage implementation for the workers who have received a pay raise at this time. We attribute both statements to the developmental and production optimization strategies. Finally, the data provides evidences that the upcoming training costs are potentially absorbed by the negative shifts in the training volume. Work-related characteristics are the strongest predictors and their effect remain consistent with the predominant structural inequalities. The current research empirically contributes to the existing literature of the emerging minimum wage research outcomes in Germany, draws attention to the problematics of a tight connection between labor market and education inequalities and specifies selected aspects of training participation.