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.
Topics: Distribution , Inequality , Labor and employment