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Minimum wages and vocational training incentives in Germany

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  • Kellermann, Kim Leonie

Abstract

This paper examines the impact of sector-specific minimum wages in Germany on the willingness of youths to undergo vocational training. The theoretical impact of wage floors on educational incentives is ambiguous: on the one hand, they raise the opportunity cost of education and prevent further skill accumulation. On the other hand, they lower the employment probability of unskilled workers which promotes additional training. We use a GSOEP-based sample of youths aged 17 to 24, covering a time period between 1994 and 2014 in order to estimate the probability of opting for an apprenticeship employing a mixed logit model. Contrasting with evidence from other countries, we find that increasing sectoral wage floors have a positive effect on already high training probabilities of youths. In case of binding minimum wages, demand for unskilled workers declines which lowers the opportunity cost of education. This effect is reinforced by high requirements concerning professional skills.

Suggested Citation

  • Kellermann, Kim Leonie, 2017. "Minimum wages and vocational training incentives in Germany," CIW Discussion Papers 3/2017, University of Münster, Center for Interdisciplinary Economics (CIW).
    • Handle: RePEc:zbw:ciwdps:32017
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    Cited by:

    1. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa, 2018. "The German minimum wage: Effects on business expectations, profitability, and investments," FAU Discussion Papers in Economics 13/2018, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. Bossler Mario & Gürtzgen Nicole & Lochner Benjamin & Betzl Ute & Feist Lisa, 2020. "The German Minimum Wage: Effects on Productivity, Profitability, and Investments," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(2-3), pages 321-350, April.

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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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