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The Short- and Medium-term Distributional Effects of the German Minimum Wage Reform

Aufsätze referiert extern - Web of Science

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

In: Empirical Economics (2022), im Ersch. [online first: 2022-09-05]

Abstract

This study quantifies the distributional effects of the minimum wage introduced in Germany in 2015. Using detailed Socio-Economic Panel survey data, we assess changes in the hourly wages, working hours, and monthly wages of employees who were entitled to be paid the minimum wage. We employ a difference-in-differences analysis, exploiting regional variation in the “bite” of the minimum wage. At the bottom of the hourly wage distribution, we document wage growth of 9% in the short term and 21% in the medium term. At the same time, we find a reduction in working hours, such that the increase in hourly wages does not lead to a subortionate increase in monthly wages. We conclude that working hours adjustments play an important role in the distributional effects of minimum wages.

Carsten Schröder

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



JEL-Classification: J31;J38;J22
Keywords: Minimum wage, wage distribution, hourly wages, inequality
DOI:
https://doi.org/10.1007/s00181-022-02288-4
Supplementary Information
https://static-content.springer.com/esm/art%3A10.1007%2Fs00181-022-02288-4/MediaObjects/181_2022_2288_MOESM1_ESM.pdf

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