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The minimum wage affects them all: Evidence on employment spillovers in the roofing sector

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  • Aretz, Bodo
  • Arntz, Melanie
  • Gregory, Terry

Abstract

This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.

Suggested Citation

  • Aretz, Bodo & Arntz, Melanie & Gregory, Terry, 2012. "The minimum wage affects them all: Evidence on employment spillovers in the roofing sector," ZEW Discussion Papers 12-061, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:12061
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    More about this item

    Keywords

    minimum wage; Germany; capital-labour substitution; labour-labour substitution; scale effect;
    All these keywords.

    JEL classification:

    • 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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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