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Labor Market Frictions and Spillover Effects from Publicly Announced Sectoral Minimum Wages

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  • Demir, Gökay

    (IZA)

Abstract

This paper analyzes the horizontal spillover effects of Germany's first sectoral minimum wage. Using a difference-in-differences estimation, I examine the impact of the public announcement and introduction of the minimum wage on sub-minimum wage workers in related jobs outside the minimum wage sector, defined using employment flows. I find an increase in wages and job-to-job transitions for sub-minimum wage workers in related jobs. The spillover effects are driven by workers who reallocate to better-paying establishments, have low labor market experience, and are more closely connected to the minimum wage sector by having former coworkers in that sector.

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  • Demir, Gökay, 2024. "Labor Market Frictions and Spillover Effects from Publicly Announced Sectoral Minimum Wages," IZA Discussion Papers 17510, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17510
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    More about this item

    Keywords

    spillover; outside option; labor market frictions; minimum wages;
    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
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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