SOEP Brown Bag Seminar

I exploit the German statutory minimum wage introduction in 2015 to estimate its effects on geographic labor mobility using a 2% sample of administrative data. I find an increase in out-migration due to the minimum wage of low-skilled workers with migrant background from counties where a high-share of workers is subject to the minimum wage to urban labor market regions. The increase in out-migration is mainly attributable to optimal workplace reallocation of respective workers to better quality establishments. In contrast, native low-skilled workers do also relocate to better quality establishments, however, while not moving. The difference in reallocation behavior shows that migrants react stronger to changing local labor market conditions. Therefore, the results emphasize that statutory minimum wages lead to changes in the socio-demographic structure of local labor markets and a possible concentration of low-skilled workers with migrant background in urban labor market regions.