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Arabzadeh, Hamzeh, Almut Balleer, Britta Gehrke & Ahmet Ali Taskin (2024): Minimum wages, wage dispersion and financial constraints in firms. In: European Economic Review, Jg. 163, 2024-01-14. DOI:10.1016/j.euroecorev.2024.104678

Abstract

"This paper studies how minimum wages affect the wage distribution if firms face financial constraints. Using German employer-employee data and firm balance sheets, we document that the within-firm wage dispersion decreases more with higher minimum wages when firms are financially constrained. We introduce financial frictions into a search and matching labor market model with stochastic job matching, imperfect information, and endogenous effort. In line with the empirical literature, the model predicts that a higher minimum wage reduces hirings and separations. Firms become more selective such that their employment and wage dispersion fall. If effort increases strongly, firms may increase employment at the expense of higher wage dispersion. Financially constrained firms are more selective and reward effort less. As a result, within-firm wage dispersion and employment in these firms fall more with the minimum wage." (Author's abstract, IAB-Doku, © 2024 Elsevier) ((en))

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Gürtzgen, Nicole & Franka Vetter (2024): Mindestlohnerhöhung auf 12 Euro: Nur wenige Betriebe reagierten eigenen Angaben zufolge mit Entlassungen. In: IAB-Forum H. 04.04.2024, 2024-04-02. DOI:10.48720/IAB.FOO.20240404.01

Abstract

"Die bislang deutlichste Erhöhung des gesetzlichen Mindestlohns auf 12 Euro pro Stunde im Oktober 2022 betraf knapp 20 Prozent der Betriebe in Deutschland. Nach Daten der IAB-Stellenerhebung zeigten sich dabei große Unterschiede zwischen den Wirtschaftszweigen, wobei im Gastgewerbe anteilig am meisten, im Baugewerbe am wenigsten Betriebe betroffen waren. Als Reaktion auf die Anhebung des Mindestlohns erhöhten die Betriebe nach eigenen Angaben am häufigsten die Preise von Produkten und Dienstleistungen. Sie stellten außerdem häufiger Investitionen und Neueinstellungen zurück." (Autorenreferat, IAB-Doku)

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Kunaschk, Max (2024): The effects of minimum wages on employment and Prices - Evidence from the hairdressing sector. In: Labour Economics online erschienen am 06.04.2024. DOI:10.1016/j.labeco.2024.102540

Abstract

"This paper provides comprehensive evidence on the labor and product market effects of a high-impact minimum wage introduction in the highly competitive hairdressing sector. Using detailed administrative data, I find negligible overall employment effects, even though the minimum wage substantially increased hourly wages. However, sub-group analyses reveal considerable heterogeneity in the estimated employment effects and suggest shifts away from marginal towards regular employment. Analyses of the price effects suggest that the reform increased output prices considerably, implying that consumers largely paid for the minimum wage." (Author's abstract, IAB-Doku, © Elsevier) ((en))

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Moog, Alexander (2024): Internal migration after a uniform minimum wage introduction. (arXiv papers 2404.19590), 47 S. DOI:10.48550/arXiv.2404.19590

Abstract

"Internal migration is an essential aspect to study labor mobility. I exploit the German statutory minimum wage introduction in 2015 to estimate its push and pull effects on internal migration using a 2% sample of administrative data. In a conditional fixed effects Poisson difference-in-differences framework with a continuous treatment, I find that the minimum wage introduction leads to an increase in the out-migration of low-skilled workers with migrant background by 25% with an increasing tendency over time from districts where a high share of workers are subject to the minimum wage (high-bite districts). In contrast the migration decision of native-born low-skilled workers is not affected by the policy. However, both native-born low-skilled workers and those with a migrant background do relocate across establishments, leaving high-bite districts as their workplace. In addition, I find an increase for unemployed individuals with a migrant background in out-migrating from high-bite districts. These results emphasize the importance of considering the effects on geographical labor mobility when implementing and analyzing policies that affect the determinants of internal migration." (Author's abstract, IAB-Doku) ((en))

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Ohlert, Clemens (2024): Minimum Wage Effects on Gender Gaps in Working Hours and Earnings in Germany. (ECINEQ working paper series / Society for the Study of Economic Inequality 2024-663), Verona, 26 S.

Abstract

"This paper investigates whether the introduction of a statutory minimum wage in Germany has led to a reduction in gender gaps in hourly wages, working hours and monthly earnings. Using the 2014 Structure of Earnings Survey and the 2015 Earnings Survey, a difference-in-differences approach was applied at the establishment level. The results show a reduction of the gender pay gap in establishments of up to 3.6 percentage points due to the introduction of the minimum wage. While the effects on hourly wages of women and men in low-wage jobs were the same on average, women are more often affected by the minimum wage and therefore benefit more often from it. The gender time gap in establishments decreased by about 2.4 percentage points on average and by about 3.9 percentage points among low wage workers. The minimum wage led to a reduction in the average gender gap in gross monthly earnings in establishments of up to 6.1 percentage points and by up to 4.6 percentage points among low-wage employees." (Author's abstract, IAB-Doku) ((en))

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Arabzadeh, Hamzeh, Almut Balleer, Britta Gehrke & Ahmet Ali Taskin (2023): Minimum Wages, Wage Dispersion and Financial Constraints in Firms. (IZA discussion paper / Forschungsinstitut zur Zukunft der Arbeit 16455), Bonn, 56 S.

Abstract

"This paper studies how minimum wages affect the wage distribution if firms face financial constraints. Using German employer-employee data and firm balance sheets, we document that the within-firm wage dispersion decreases more with higher minimum wages when firms are financially constrained. We introduce financial frictions into a search and matching labor market model with stochastic job matching, imperfect information, and endogenous effort. In line with the empirical literature, the model predicts that a higher minimum wage reduces hirings and separations. Firms become more selective such that their employment and wage dispersion fall. If effort increases strongly, firms may increase employment at the expense of higher wage dispersion. Financially constrained firms are more selective and reward effort less. As a result, within-firm wage dispersion and employment in these firms fall more with the minimum wage." (Author's abstract, IAB-Doku) ((en))

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Backhaus, Teresa & Kai-Uwe Müller (2023): Can a federal minimum wage alleviate poverty and income inequality? Ex-post and simulation evidence from Germany. In: Journal of European Social Policy, Jg. 33, H. 2, S. 216-232. DOI:10.1177/09589287221144233

Abstract

"Minimum wages are increasingly discussed as an instrument against (in-work) poverty and income inequality in Europe. Just recently the German government opted for a substantial ad-hoc increase of the minimum-wage level to €12 per hour mentioning poverty prevention as an explicit goal. We use the introduction of the federal minimum wage in Germany in 2015 to study its redistributive impact on disposable household incomes. Based on the German Socio-Economic Panel we analyse changes in poverty and income inequality investigating different mechanisms of the transmission from individual gross wage-rates to disposable household incomes. We find that the minimum wage is an inadequate tool for income redistribution because it does not target poor households. Individuals affected by the minimum wage are not primarily in households at the bottom of the income distribution but are spread across it. Consequently, welfare dependence decreases only marginally. The withdrawal of transfers or employment effects cannot explain the limited effect on poverty. Complementary simulations show that neither full compliance nor a markedly higher level of €12 per hour can render the minimum wage more effective in reducing poverty." (Author's abstract, IAB-Doku) ((en))

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Bossler, Mario & Martin Popp (2023): Labor Demand on a Tight Leash. (LASER discussion papers 143), Erlangen, 77 S. DOI:10.48720/IAB.DP.2302

Abstract

"In diesem Aufsatz stellen wir ein Arbeitsnachfrage-Modell auf, das Einstellungskosten berücksichtigt, die aufgrund eines angespannten Arbeitsmarktes bei der Besetzung offener Stellen anfallen. Darauf aufbauend schätzen wir den Effekt der Arbeitsmarktanspannung auf die betriebliche Arbeitsnachfrage, indem wir neuartige Bartik-Instrumente sowie administrative Beschäftigungsdaten für Deutschland heranziehen. Im Einklang mit der Theorie deuten die IV-Ergebnisse darauf hin, dass ein zehnprozentiger Anstieg der Arbeitsmarktanspannung die betriebliche Beschäftigung um rund 0,5 Prozent reduziert. Außerdem zeigt sich, dass die betriebliche Lohnelastizität der Arbeitsnachfrage durch Einbeziehung von Suchexternalitäten auf der aggregierten Ebene von -0,7 auf -0,5 sinkt. In Bezug auf die Einführung des gesetzlichen Mindestlohns im Jahr 2015 implizieren die Elastizitäten nur geringfügig negative Beschäftigungseffekte, was die Ergebnisse empirischer Ex-Post-Evaluationen widerspiegelt. Darüber hinaus führte die Verdoppelung der Arbeitsmarktanspannung in Deutschland zwischen 2012 und 2019 zu einer Verringerung des Beschäftigungswachstums um rund 1,1 Millionen Arbeitsplätze." (Autorenreferat, IAB-Doku)

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Bossler, Mario & Martin Popp (2023): Labor Demand on a Tight Leash. (IAB-Discussion Paper 02/2023), Nürnberg, 90 S. DOI:10.48720/IAB.DP.2302

Abstract

"In diesem Aufsatz stellen wir ein Arbeitsnachfrage-Modell auf, das Einstellungskosten berücksichtigt, die aufgrund eines angespannten Arbeitsmarktes bei der Besetzung offener Stellen anfallen. Darauf aufbauend schätzen wir den Effekt der Arbeitsmarktanspannung auf die betriebliche Arbeitsnachfrage, indem wir neuartige Bartik-Instrumente sowie administrative Beschäftigungsdaten für Deutschland heranziehen. Im Einklang mit der Theorie deuten die IV-Ergebnisse darauf hin, dass ein zehnprozentiger Anstieg der Arbeitsmarktanspannung die betriebliche Beschäftigung um rund 0,5 Prozent reduziert. Außerdem zeigt sich, dass die betriebliche Lohnelastizität der Arbeitsnachfrage durch Einbeziehung von Suchexternalitäten auf der aggregierten Ebene von -0,7 auf -0,5 sinkt. In Bezug auf die Einführung des gesetzlichen Mindestlohns im Jahr 2015 implizieren die Elastizitäten nur geringfügig negative Beschäftigungseffekte, was die Ergebnisse empirischer Ex-Post-Evaluationen widerspiegelt. Darüber hinaus führte die Verdoppelung der Arbeitsmarktanspannung in Deutschland zwischen 2012 und 2019 zu einer Verringerung des Beschäftigungswachstums um rund 1,1 Millionen Arbeitsplätze." (Autorenreferat, IAB-Doku)

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Bossler, Mario & Thorsten Schank (2023): Wage inequality in Germany after the minimum wage introduction. In: Journal of labor economics, Jg. 41, H. 3, S. 813-857., 2022-03-17. DOI:10.1086/720391

Abstract

"Monthly wage inequality in Germany continued to increase in the early 2000s, which is mainly explained by a rising part-time employment share. After 2010, inequality returned to the level of 2000. About half of the recent decrease is due to the introduction of the national minimum wage in 2015. While employment effects of the minimum wage are negligible, we find strong wage increases among the existing workforce. The minimum wage lowered wage inequality within eastern and western Germany, but also led to a convergence of the east-west wage differential. The increased labor incomes were not offset by decreasing social benefits." (Author's abstract, © University of Chicago Press) ((en))

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Brandon, Alec, Justin E. Holz, Andrew Simon & Haruka Uchida (2023): Minimum Wages and Racial Discrimination in Hiring: Evidence from a Field Experiment. (Upjohn Institute working paper 389), Kalamazoo, Mich., 90 S. DOI:10.17848/wp23-389

Abstract

"When minimum wages increase, employers may respond to the regulatory burdens by substituting away from disadvantaged workers. We test this hypothesis using a correspondence study with 35,000 applications around ex-ante uncertain minimum wage increases in three U.S. states. Before the increases, applicants with distinctively Black names were 19 percent less likely to receive a callback than equivalent applicants with distinctively white names. Announcements of minimum wage hikes substantially reduce callbacks for all applicants but shrink the racial callback gap by 80 percent. Racial inequality decreases because firms disproportionately reduce callbacks to lower-quality white applicants who benefited from discrimination under lower minimum wages." (Author's abstract, IAB-Doku) ((en))

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Brochu, Pierre, David A. Green, James Townsend & Thomas Lemieux (2023): The minimum wages, turnover, and the shape of the wage distribution. (IFS working paper / Institute for Fiscal Studies 2023,32), London, 62 S.

Abstract

"This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry wages are set according to a job ladder, and where firms preserve their internal wage structure due to fairness or internal incentives issues." (Author's abstract, IAB-Doku) ((en))

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Brunner, Laura, Nina Gloger & Christian Hohendanner (2023): Sonderauswertung zur Situation der vom Mindestlohn betroffenen Betriebe im Jahr 2022 auf Basis des IAB-Betriebspanels. Abschlussbericht. Studie im Auftrag der Mindestlohnkommission. Nürnberg, 26 S.

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Börschlein, Erik-Benjamin, Mario Bossler, Bernd Fitzenberger & Martin Popp (2023): Mit der Erhöhung auf 12 Euro liegt die Entwicklung des gesetzlichen Mindestlohns über der Tariflohn- und Preisentwicklung. In: IAB-Forum H. 11.12.2023 Nürnberg. DOI:10.48720/IAB.FOO.20231211.01

Abstract

"Zum 1. Oktober 2022 wurde der gesetzliche Mindestlohn außerplanmäßig von 10,45 Euro auf 12 Euro pro Stunde erhöht. Er liegt seither deutlich über der Entwicklung der Tariflöhne. Obwohl die hohe Inflation der vergangenen beiden Jahre die Kaufkraft des Mindestlohns geschmälert hat, liegt er preisbereinigt noch immer 11,6 Prozent über dem Niveau von 2015. Die durchschnittlichen Tariflöhne hingegen haben seitdem um 3,8 Prozent an realem Wert verloren." (Autorenreferat, IAB-Doku)

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Caliendo, Marco, Nico Pestel & Rebecca Olthaus (2023): Long-Term Employment Effects of the Minimum Wage in Germany: New Data and Estimators. (arXiv papers), 35 S.

Abstract

"We study the long-term effects of the 2015 German minimum wage introduction and its subsequent increases on regional employment. Using data from two waves of the Structure of Earnings Survey allows us to estimate models that account for changes in the minimum wage bite over time. While the introduction mainly affected the labor market in East Germany, the raises are also increasingly affecting low-wage regions in West Germany, such that around one third of regions have changed their (binary) treatment status over time. We apply different specifications and extensions of the classic difference-in-differences approach as well as a set of new estimators that enables for unbiased effect estimation with a staggered treatment adoption and heterogeneous treatment effects. Our results indicate a small negative effect on dependent employment of 0.5 percent, no significant effect on employment subject to social security contributions, and a significant negative effect of about 2.4 percent on marginal employment until the first quarter of 2022. The extended specifications suggest additional effects of the minimum wage increases, as well as stronger negative effects on total dependent and marginal employment for those regions that were strongly affected by the minimum wage in 2015 and 2019." (Author's abstract, IAB-Doku) ((en))

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Caliendo, Marco, Alexandra Fedorets, Malte Preuß, Carsten Schröder & Linda Wittbrodt (2023): The short- and medium-term distributional effects of the German minimum wage reform. In: Empirical economics, Jg. 64, H. 3, S. 1149-1175. DOI:10.1007/s00181-022-02288-4

Abstract

"This study quantifies the distributional effects of the minimum wage introduced in Germany in 2015. Using detailed Socio-Economic Panel survey data, we assess changes in the hourly wages, working hours, and monthly wages of employees who were entitled to be paid the minimum wage. We employ a difference-in-differences analysis, exploiting regional variation in the “bite” of the minimum wage. At the bottom of the hourly wage distribution, we document wage growth of 9% in the short term and 21% in the medium term. At the same time, we find a reduction in working hours, such that the increase in hourly wages does not lead to a subortionate increase in monthly wages. We conclude that working hours adjustments play an important role in the distributional effects of minimum wages." (Author's abstract, IAB-Doku, © Springer-Verlag) ((en))

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Di Nola, Alessandro, Luke Haywood & Haomin Wang (2023): Gendered effects of minimum wage. (Working Paper Series / Universität Konstanz, Cluster of Excellence 'The Politics of Inequality' 14), Konstanz, 52 S.

Abstract

"Women are more likely to work in jobs with low hours than men. Low-hour jobs are associated with lower hourly wages and are more likely impacted by minimum wages that set a floor on hourly wages. We document that the first German minimum wage significantly increased women's transition towards jobs with higher weekly hours. We construct and estimate an equilibrium search model with demographic and firm productivity heterogeneity. The model replicates observed gender gaps in employment, hours and wage and the positive relationship between hours and hourly wages. We implement the minimum wage in our model with a penalty to address non-compliance. Based on our model, the minimum wage primarily reduces the gender income gap through the gender wage gap. At its 2022 level, the German minimum wage reduces the gender employment and hours gap due to an upward reallocation effect, resulting in women's increased participation in higher-hour jobs with lower separation rates. The upward reallocation effect is the strongest for women with children and varies by marital state and spousal income. While the minimum wage only modestly discourages firms from posting jobs, it shifts job offers toward full-time positions." (Author's abstract, IAB-Doku) ((en))

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Drechsel-Grau, Moritz (2023): Employment and Reallocation Effects of Higher Minimum Wages. (CESifo working paper 10412), München, 64 S.

Abstract

"This paper studies the employment and reallocation effects of minimum wages in Germany in a search-and-matching model with endogenous job search effort and vacancy posting, multiple employment levels, a progressive tax-transfer system, and worker and firm heterogeneity. I find that minimum wages up to 70% of the median wage significantly increase productivity, hours worked and output without reducing employment. In frictional labor markets, however, reallocation takes time whenever the minimum wage cuts deep into the wage distribution. I show that gradually implementing a high minimum wage is necessary to avoid elevated unemployment rates during the transition." (Author's abstract, IAB-Doku) ((en))

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Dütsch, Matthias, Orkun Altun, Luisa Grundmann & Ralf Himmelreicher (2023): What does the German minimum wage do? The impact of the introduction of the statutory minimum wage on the composition of low- and minimum-wage labour. (baua: Preprint / Bundesanstalt für Arbeitsschutz und Arbeitsmedizin), Dortmund, 30 S. DOI:10.21934/baua:preprint20230201

Abstract

"In this article, we examine structural changes in minimum-wage and low-wage labour after the introduction and first increase of the German minimum wage. Changes in the risks workers face of earning gross hourly wages below the minimum-wage or low-wage thresholds are identified by comparing individual, company-level and sectoral characteristics based on the Structure of Earnings Surveys (SESs) 2014 and 2018. The SES is a mandatory survey of companies that provides information on wages and working hours for approximately 1 million jobs and nearly 70,000 companies from all industries. Using these rich data, we present the first systematic analysis of how structural changes in individual-, company-, and industry-level determinants affect minimum- and low-wage workers. Using a descriptive analysis, we first summarize the changing pattern in jobs, companies, and industries after the minimum wage introduction. Second, we use random intercept-only models to estimate the explanatory power of the individual, company, and industry levels in the years 2014 and 2018 respectively. Third, we perform logistic and linear regression estimations to assess the changing risks of having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum and low-wage thresholds. We conclude that the minimum wage had an elevator effect regarding minimum-wage labour. However, compositional effects regarding the minimum-wage and low-wage workforce were evident in terms of individual and company factors. There was a selective redistribution of minimum-wage employees into slightly higher wage ranges. Furthermore, convergence seems to have occurred predominantly among sectors, as their explanatory power for lower wages declined." (Author's abstract, IAB-Doku) ((en))

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Dütsch, Matthias, Orkun Altun, Luisa Grundmann & Ralf Himmelreicher (2023): What Does the German Minimum Wage Do? The Impact of the Introduction of the Statutory Minimum Wage on the Composition of Low- and Minimum-Wage Labour. In: Jahrbücher für Nationalökonomie und Statistik, Jg. 243, H. 3-4, S. 355-396. DOI:10.1515/jbnst-2022-0070

Abstract

"In this article, we examine structural changes in minimum wage and low wage labor following the introduction and first increase of the German minimum wage. Changes in the impact that workers face earning gross hourly wages below the minimum-wage or low-wage thresholds are identified by comparing individual, company and sectoral characteristics based on the Structure of Earnings Surveys (SESs) 2014 and 2018. The SES is a mandatory survey of companies that provides information on wages and working hours for approximately 1 million jobs and nearly 70,000 companies across all industries. Using these rich data, we present the first systematic analysis of how structural changes in individual-, company-, and industry-level determinants affect minimum- and low-wage workers. Using descriptive analysis, we first summarize the changing pattern in jobs, companies, and industries after the introduction of minimum wage. Second, we use random intercept-only models to estimate the explanatory power at the individual, company, and industry levels in 2014 and 2018. Third, we perform logistic and linear regression estimations to assess the changing trends in having a minimum- or low-wage job and the distance between a worker’s actual earnings and the minimum- and low-wage thresholds. We conclude that the minimum wage had an elevator effect on minimum wage labor. However, compositional effects regarding the minimum-wage and low-wage workforce were evident in terms of individual and company factors. There was a selective redistribution of minimum wage employees into slightly higher wage ranges. Furthermore, convergence seems to have occurred predominantly among sectors, as their explanatory power for lower wages declined." (Author's abstract, IAB-Doku, © De Gruyter) ((en))