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The Statutory Minimum Wage in Germany and the Labor Demand Elasticities of Low-Skilled Workers: A Regression Discontinuity Approach with Establishment Panel Data

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  • Kölling, Arnd

Abstract

This study examines the influence of the statutory minimum wage on labor demand elasticities regarding low-skilled workers. For this, a regression discontinuity analysis is conducted using company panel data from 2013 to 2018. In addition, a possible endogeneity of the remuneration for low-skilled workers was considered using an IV estimation. It is shown that the monopsonistic structures of the labor market may continue to exist after the introduction of the minimum wage. Additionally, the own-wage elasticity for low-skilled workers did not change over the period considered. However, in the short run, stronger substitutive relationships with medium-skilled workers seem to exist, and probably also with highly qualified employees in the long run.

Suggested Citation

  • Kölling, Arnd, 2020. "The Statutory Minimum Wage in Germany and the Labor Demand Elasticities of Low-Skilled Workers: A Regression Discontinuity Approach with Establishment Panel Data," GLO Discussion Paper Series 687, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:687
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    More about this item

    Keywords

    Minimum Wage; Labor Demand; Monopsony; Low-skilled Workers;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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