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The Effects of Germany’s Statutory Minimum Wage on Employment and Welfare Dependency

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  • Schmitz Sebastian

    (German Federal Ministry for Economic Affairs and Energy,Berlin, Germany)

Abstract

In January 2015, Germany introduced a federal, statutory minimum wage of 8.50 € per hour. This study evaluates the effects of this policy on regular and marginal employment and on welfare dependency. Based on the county-level administrative data, this study uses the difference-in-differences technique, exploiting regional variation in the bite of the minimum wage, i.e., the county-specific share of employees paid less than 8.50 € before the introduction of the minimum wage. The minimum wage had a considerable negative effect on marginal employment. There is also some indication that regular employment was slightly reduced. Concerning welfare dependency, the minimum wage reduced the number of working welfare recipients, with some indication that about one half of them left welfare receipt due to the minimum wage.

Suggested Citation

  • Schmitz Sebastian, 2019. "The Effects of Germany’s Statutory Minimum Wage on Employment and Welfare Dependency," German Economic Review, De Gruyter, vol. 20(3), pages 330-355, August.
    • Handle: RePEc:bpj:germec:v:20:y:2019:i:3:p:330-355
    DOI: 10.1111/geer.12196
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    Citations

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    Cited by:

    1. Gabriel M. Ahlfeldt & Duncan Roth & Tobias Seidel, 2022. "Optimal minimum wages," CEP Discussion Papers dp1823, Centre for Economic Performance, LSE.
    2. Adam Ayaita, 2022. "Does Money Change Who You Are? Quasi-Experimental Evidence on the Effects of Wage Increases on Personality," SOEPpapers on Multidisciplinary Panel Data Research 1170, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Bossler, Mario & Westermeier, Christian, 2020. "Measurement error in minimum wage evaluations using survey data," IAB-Discussion Paper 202011, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Jonathan Cribb & Giulia Giupponi & Robert Joyce & Attila Lindner & Tom Waters & Thomas Wernham & Xiaowei Xu, 2021. "The distributional and employment impacts of nationwide Minimum Wage changes," IFS Working Papers W21/48, Institute for Fiscal Studies.
    5. Ayaita, Adam, 2022. "Does Money Change Who You Are? Quasi-Experimental Evidence on the Effects of Wage Increases on Personality," EconStor Preprints 256931, ZBW - Leibniz Information Centre for Economics.

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