Abstract

This project examines the impact of minimum wages on on-the-job training in Germany. Theoretical models predict two potential effects: an increased minimum wage may reduce training if firms offset higher labor costs by converting non-monetary compensation into wages, or it may increase training if firms seek to increase employee productivity to balance the higher wages. The net effect on firm-provided training is thus a priori unclear. The existing empirical evidence also yields no clear results (Doucouliagos and Zigova 2025), thus necessitating further empirical examinations of the issue. The study exploits the 2015 introduction of a statutory minimum wage in Germany to study this question. It employs firm-level data in a difference-in-differences approach, comparing firms in counties that were more and less strongly affected by the nationwide minimum wage. Particular attention will be given to distinguishing the direct effects on firms with many minimum wage worker, and the spillover effects on higher-paying firms that may benefit from reallocation effects (cf. Dustmann et al. 2021). References: Doucouliagos, H. and K. Zigova (2025). Minimum Wages and Human Capital Investment: A Meta-Regression Analysis. British Journal of Industrial Relations. Dustmann, C., A. Lindner, U. Schönberg, M. Umkehrer, and P. vom Berge (2021). Reallocation Effects of the Minimum Wage. The Quarterly Journal of Economics 137 (1), 267–328.