Evaluating the minimum-wage exemption of the long-term unemployed in Germany

Abstract

"The authors evaluate the exemption of long-term unemployed job seekers from Germany's national minimum wage. Using linked survey and administrative micro data, they rely on a regression discontinuity design to identify the effects of the policy by comparing hiring rates, employment stability, and entry wages around the administrative threshold between short-term and long-term unemployment. They find that the exemption is very rarely used and that the minimum wage binds irrespective of past unemployment duration. While the minimum wage led to a relative rise in entry wages for the long-term unemployed compared to the short-term unemployed, the authors do not detect a relative deterioration in their employment prospects." (Author's abstract, IAB-Doku) ((en))

Cite article

Umkehrer, M. & Vom Berge, P. (2020): Evaluating the minimum-wage exemption of the long-term unemployed in Germany. In: ILR review, Vol. 73, No. 5, p. 1095-1118. DOI:10.1177/0019793920907036