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How effective are enforcement measures for compliance with the minimum wage? Evidence from Germany

Author

Listed:
  • Mario Bossler

    (Institute for Employment Research (IAB), Labor and Socio-Economic Research Center of the University of Erlangen-Nuremberg (LASER), Germany)

  • Ursula Jaenichen

    (Institute for Employment Research (IAB), Germany)

  • Simeon Schächtele

    (Inter-American Development Bank (IDB),* USA)

Abstract

The extent of non-compliance with minimum wages is heavily debated, but little is known about the effectiveness of enforcement measures. Following the introduction of a national minimum wage in Germany in 2015, employers in a catalogue of industries deemed at high risk of non-compliance were subject to more stringent enforcement requirements, such as an obligation to record hours worked. Using national administrative employment data, in this study the authors exploit the variation in enforcement measures to analyze the effect on non-compliance. As an empirical strategy, they balance jobs from industries with stricter enforcement measures with jobs from other industries and apply difference-in-differences estimations. The evidence points to a small compliance-enhancing effect of the enforcement measures. The gains in compliance are not offset by more pronounced employment losses in those industries subject to stricter enforcement.

Suggested Citation

  • Mario Bossler & Ursula Jaenichen & Simeon Schächtele, 2022. "How effective are enforcement measures for compliance with the minimum wage? Evidence from Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 43(2), pages 943-971, May.
    • Handle: RePEc:sae:ecoind:v:43:y:2022:i:2:p:943-971
    DOI: 10.1177/0143831X20962193
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    References listed on IDEAS

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    2. Laszlo Goerke & Markus Pannenberg, 2023. "Minimum Wage Non-compliance: The Role of Co-determination," SOEPpapers on Multidisciplinary Panel Data Research 1199, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Luke Haywood, 2023. "Gendered Effects of the Minimum Wage," UB School of Economics Working Papers 2023/450, University of Barcelona School of Economics.
    4. Shabneez Bhankaraully & Michel Goyer & Jeremy Aroles, 2023. "Workplace discrimination against LGBT employees in Mauritius: A sociological perspective," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(4), pages 1105-1126, November.

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