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The Devil Is in the Details: Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs

Author

Listed:
  • Bossler, Mario

    (Institute for Employment Research (IAB), Nuremberg)

  • Liang, Ying

    (University of Mainz)

  • Schank, Thorsten

    (University of Mainz)

Abstract

In 2015, Germany introduced a national minimum wage. While the literature agrees on at most limited negative effects on the overall employment level, we go into detail and analyze the impact on the working hours dimension and on the subset of minijobs. Using data from the German Structure of Earnings Survey in 2010, 2014, and 2018, we find empirical evidence that the minimum wage significantly reduces inequality in hourly and monthly wages. While various theoretical mechanisms suggest a reduction in working hours, these remain unchanged on average. However, minijobbers experience a notable reduction in working hours which can be linked to the specific institutional framework. Regarding employment, the results show no effects for regular jobs, but there is a noteworthy decline in minijobs, driven by transitions to regular employment and non-employment. The transitions in non-employment imply a wage elasticity of employment of −0.1 for minijobs. Our findings highlight that the institutional setting leads to heterogeneous effects of the minimum wage.

Suggested Citation

  • Bossler, Mario & Liang, Ying & Schank, Thorsten, 2024. "The Devil Is in the Details: Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs," IZA Discussion Papers 16964, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16964
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    References listed on IDEAS

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    Cited by:

    1. Ying Liang, 2024. "Firms' Risk Adjustments to Minimum Wage: Financial Leverage and Labor Share Trade-off," Papers 2408.03659, arXiv.org.

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    More about this item

    Keywords

    minimum wage; working hours; monthly wages; hourly wages; minijobs;
    All these keywords.

    JEL classification:

    • 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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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