IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v240y2020i2-3p161-200n1.html
   My bibliography  Save this article

Characteristics Contributing to Low- and Minimum-Wage Labour in Germany

Author

Listed:
  • Dütsch Matthias

    (Institut of Sociology and Coordination and Information Office of the Minimum Wage Commission, c/o Federal Institute for Occupational Safety and Health, Freie Universität Berlin, Nöldnerstr. 40–42, 10317Berlin, Germany)

  • Himmelreicher Ralf

    (Institut of Sociology and Coordination and Information Office of the Minimum Wage Commission, c/o Federal Institute for Occupational Safety and Health, Freie Universität Berlin, Nöldnerstr. 40–42, 10317Berlin, Germany)

Abstract

In this article we examine the correlation between characteristics of individuals, companies, and industries involved in low-wage labour in Germany and the risks workers face of earning hourly wages that are below the minimum-wage or low-wage thresholds. To identify these characteristics, we use the Structure of Earnings Survey (SES) 2014. The SES is a mandatory survey of companies which provides information on wages and working hours from about 1 million jobs and nearly 70,000 companies from all industries. This data allows us to present the first systematic analysis of the interaction of individual-, company-, and industry-level factors on minimum- and low-wage working in Germany. Using a descriptive analysis, we first give an overview of typical low-paying jobs, companies, and industries. Second, we use random intercept-only models to estimate the explanatory power of the individual, company, and industry levels. One main finding is that the influence of individual characteristics on wage levels is often overstated: Less than 25 % of the differences in the employment situation regarding being employed in minimum-wage or low-wage jobs can be attributed to the individual level. Third, we performed logistic and linear regression estimations to assess the risks of having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum- or low-wage thresholds. Our findings allow us to conclude that several determinants related to individuals appear to suggest a high low-wage incidence, but in fact lose their explanatory power once controls are added for factors relating to the companies or industries that employ these individuals.

Suggested Citation

  • Dütsch Matthias & Himmelreicher Ralf, 2020. "Characteristics Contributing to Low- and Minimum-Wage Labour in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 161-200, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:161-200:n:1
    DOI: 10.1515/jbnst-2018-0076
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2018-0076
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2018-0076?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yin King Fok & Rosanna Scutella & Roger Wilkins, 2015. "The Low-Pay No-Pay Cycle: Are There Systematic Differences across Demographic Groups?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(6), pages 872-896, December.
    2. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    3. Gerhard Bosch, 2018. "The making of the German minimum wage: a case study of institutional change," Industrial Relations Journal, Wiley Blackwell, vol. 49(1), pages 19-33, January.
    4. Andreas Knabe & Alexander Plum, 2013. "Low-wage Jobs — Springboard to High-paid Ones?," LABOUR, CEIS, vol. 27(3), pages 310-330, September.
    5. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-620, September.
    6. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 843-881.
    7. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    8. Bruttel, Oliver & Baumann, Arne & Himmelreicher, Ralf, 2017. "Der gesetzliche Mindestlohn in Deutschland: Struktur, Verbreitung und Auswirkungen auf die Beschäftigung," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 70(7), pages 473-481.
    9. David Lagakos & Benjamin Moll & Tommaso Porzio & Nancy Qian & Todd Schoellman, 2018. "Life-Cycle Human Capital Accumulation across Countries: Lessons from US Immigrants," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 305-342.
    10. Bosch, Gerhard & Weinkopf, Claudia, 2014. "Zur Einführung des gesetzlichen Mindestlohns von 8,50 € in Deutschland," Arbeitspapiere 304, Hans-Böckler-Stiftung, Düsseldorf.
    11. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    12. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
    13. Jacob Mincer, 1962. "On-the-Job Training: Costs, Returns, and Some Implications," NBER Chapters, in: Investment in Human Beings, pages 50-79, National Bureau of Economic Research, Inc.
    14. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70(6), pages 538-538.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johannes Geyer & Ralf K. Himmelreicher, 2021. "Entgeltumwandlung im Jahr 2018: Wer nutzt sie in welchem Umfang?," Discussion Papers of DIW Berlin 1977, DIW Berlin, German Institute for Economic Research.
    2. Johannes Geyer & Ralf Himmelreicher, 2021. "Charakteristika der Entgeltumwandlung: Wer sorgt in welchem Umfang für das Alter vor?," Discussion Papers of DIW Berlin 1929, DIW Berlin, German Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dütsch Matthias & Himmelreicher Ralf, 2020. "Characteristics Contributing to Low- and Minimum-Wage Labour in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 161-200, April.
    2. Biewen, Martin & Fitzenberger, Bernd & de Lazzer, Jakob, 2017. "Rising Wage Inequality in Germany: Increasing Heterogeneity and Changing Selection into Full-Time Work," IZA Discussion Papers 11072, Institute of Labor Economics (IZA).
    3. Michael J. Böhm & Hans-Martin von Gaudecker & Felix Schran, 2024. "Occupation Growth, Skill Prices, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 42(1), pages 201-243.
    4. Falck, Oliver & Heimisch-Roecker, Alexandra & Wiederhold, Simon, 2021. "Returns to ICT skills," Research Policy, Elsevier, vol. 50(7).
    5. Dirk Antonczyk & Thomas DeLeire & Bernd Fitzenberger, 2018. "Polarization and Rising Wage Inequality: Comparing the U.S. and Germany," Econometrics, MDPI, vol. 6(2), pages 1-33, April.
    6. Ammermueller, Andreas & Kuckulenz, Anja & Zwick, Thomas, 2009. "Aggregate unemployment decreases individual returns to education," Economics of Education Review, Elsevier, vol. 28(2), pages 217-226, April.
    7. Carrillo-Tudela, Carlos & Launov, Andrey & Robin, Jean-Marc, 2021. "The fall in german unemployment: A flow analysis," European Economic Review, Elsevier, vol. 132(C).
    8. Haywood, Luke & Neumann, Michael, 2021. "Equilibrium effects of tax exemptions for low pay," Labour Economics, Elsevier, vol. 69(C).
    9. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2018. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," American Economic Review, American Economic Association, vol. 108(2), pages 393-418, February.
    10. Judith Niehues & Maximilian Stockhausen & Andreas Peichl & Charlotte Bartels & Mario Bossler & Bernd Fitzenberger & Arnim Seidlitz & Moritz Kuhn & Till Baldenius & Sebastian Kohl & Moritz Schularick &, 2020. "Ungleichheit unter der Lupe – neue politische Antworten auf ein bekanntes Thema," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 03-26, February.
    11. Cortes, Matias & Lerche, Adrian & Schönberg, Uta & Tschopp, Jeanne, 2023. "Technological Change, Firm Heterogeneity and Wage Inequality," IZA Discussion Papers 16070, Institute of Labor Economics (IZA).
    12. Lea Immel, 2021. "The Impact of Labor Market Reforms on Income Inequality: Evidence from the German Hartz Reforms," ifo Working Paper Series 347, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Baumgarten, Daniel & Irlacher, Michael & Koch, Michael, 2020. "Offshoring and non-monotonic employment effects across industries in general equilibrium," European Economic Review, Elsevier, vol. 130(C).
    14. Giesecke, Matthias & Bönke, Timm & Lüthen, Holger, 2011. "The Dynamics of Earnings in Germany: Evidence from Social Security Records," VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48692, Verein für Socialpolitik / German Economic Association.
    15. Benjamin Lochner & Bastian Schulz, 2016. "Labor Market Sorting in Germany," CESifo Working Paper Series 6066, CESifo.
    16. Koomen, Miriam & Backes-Gellner, Uschi, 2022. "Occupational tasks and wage inequality in West Germany: A decomposition analysis," Labour Economics, Elsevier, vol. 79(C).
    17. repec:eee:labchp:v:2:y:1986:i:c:p:789-848 is not listed on IDEAS
    18. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
    19. Benjamin Lochner & Bastian Schulz, 2024. "Firm Productivity, Wages, and Sorting," Journal of Labor Economics, University of Chicago Press, vol. 42(1), pages 85-119.
    20. Neffke, Frank & Nedelkoska, Ljubica & Wiederhold, Simon, 2024. "Skill mismatch and the costs of job displacement," Research Policy, Elsevier, vol. 53(2).
    21. Stüber, Heiko & Grabka, Markus M. & Schnitzlein, Daniel D., 2023. "A tale of two data sets: comparing German administrative and survey data using wage inequality as an example," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-8.

    More about this item

    Keywords

    hourly wages; low wage; minimum wage; wage differentials; social inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:161-200:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.