February 20, 2019

SOEP Brown Bag Seminar

The Minimum Wage and Fair Wage Perceptions


February 20, 2019
12:30 - 13:30


Joan Robinson Room
DIW Berlin
Room 3.3.002a
Mohrenstraße 58
10117 Berlin


Levent Neyse, Johannes König, Carsten Schröder

Whether workers feel they are paid fairly is an important determinant of their job satisfaction and productivity. Minimum wage laws aim for fairer wages for low-income workers. But, what are the impacts of minimum wage laws on workers’ fairness perceptions? Using survey data from German Socio-Economic Panel, we show that the introduction of minimum wage law in Germany increased the stated fair wage of affected workers. We, then experimentally investigate whether the rise in fair wage is a mechanical response to obligatory wage increases or whether the designated minimum wage serves as a reference point for fair wages. We do not find that the minimum wage acts as a reference point. Further, our experimental results suggest that the existence of a minimum wage does not change what wage is normatively perceived as fair.