The Impact of the Minimum Wage on Initial Labour Market Outcomes

Abstract

"In this paper, I study how the introduction of the nationwide minimum wage in Germany affects career outcomes of young workers who have just entered the labour market. The institutional setting, administrative micro data, and predicted minimum wage exposure allow estimating the causal effects of the policy by comparing cohorts initially affected by the minimum wage or not, while accounting for selection into educational track, endogenous timing of entry, changes in cohort composition, and macroeconomic conditions. Affected cohorts showed higher earnings, but no reduced employment. They worked somewhat more hours, were more likely to start careers at larger and higher-paying employers, less likely to perform occupations more exposed to the minimum wage, and less likely to carry out routine manual or menial tasks. According to these results, the minimum wage does not harm the education-to-work transition, but impacts the mix of both firms and occupations in the labour market." (Author's abstract, IAB-Doku) ((en))

Cite article

Umkehrer, M. (2025): The Impact of the Minimum Wage on Initial Labour Market Outcomes. (IAB-Discussion Paper 16/2025), Nürnberg, 35 p. DOI:10.48720/IAB.DP.2516