Abstract

This paper evaluates the short to medium run employment effects of the 2015 introduction of a
statutory minimum wage in Germany. The effect of the policy is recovered from variation in
the bite of the minimum wage across occupations using a difference-in-differences estimator.
The analysis reveals that the reform only had a small impact on employment and highlights the
importance of regional effect heterogeneity. In East Germany, marginal employment decreased
by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to
the minimum wage. In West Germany, no negative employment effects are detectable, but
regular employment increased temporarily because of the reform. The medium run estimates
include the impact of the first marginal increase of the wage floor from €8.50 to €8.84 in 2017.