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Using Occupations to Evaluate the Employment Effects of the German Minimum Wage

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  • Friedrich Martin

    (GradAB/PASS, Institute for Employment Research (IAB),Regensburger Str. 100, Nuremberg90478, Germany)

Abstract

This paper evaluates the short to medium run employment effects of the 2015 introduction of a statutory minimum wage in Germany. The effect of the policy is recovered from variation in the bite of the minimum wage across occupations using a difference-in-differences estimator. The analysis reveals that the reform only had a small impact on employment and highlights the importance of regional effect heterogeneity. In East Germany, marginal employment decreased by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to the minimum wage. In West Germany, no negative employment effects are detectable, but regular employment increased temporarily because of the reform. The medium run estimates include the impact of the first marginal increase of the wage floor from €8.50 to €8.84 in 2017.

Suggested Citation

  • Friedrich Martin, 2020. "Using Occupations to Evaluate the Employment Effects of the German Minimum Wage," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 269-294, April.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:2-3:p:269-294:n:5
    DOI: 10.1515/jbnst-2018-0085
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    1. Gabriel M. Ahlfeldt & Duncan Roth & Tobias Seidel, 2022. "Optimal minimum wages," CEP Discussion Papers dp1823, Centre for Economic Performance, LSE.

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    More about this item

    Keywords

    minimum wage; employment; jobs; occupations;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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