Minimum Wages and Productivity: The German case

We study the productivity effects of the German national minimum wage applying administrative data on German firms. Using firm-level difference-in-differences estimation, we confirm positive effects on wages and negative employment effects, and document higher productivity and output prices. We find higher wages but no employment effects at the level of aggregate industry x region cells. The minimum wage increased aggregate productivity in manufacturing through an increase in within-firm productivity. In contrast to recent evidence by Dustmann et al. (2021), we do not find that worker reallocation contributed to aggregate productivity gains.

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