Most working poor remain dependent on welfare benefits despite the minimum wage

Abstract

"We analyse the effects of the introduction of a general minimum wage of 8.50 Euro in Germany on the number of working welfare recipients, fiscal outcomes, income distribution and labour supply using microsimulation. Our results show that only a small number of working welfare recipients would exit social assistance even under the assumption that there are no negative effects on employment. Given constant employment in the short run, welfare expenditure decrease by 500 million to 650 million Euro per year. Income gains for working welfare recipients are small due to high marginal rates of benefit reduction." (Author's abstract, IAB-Doku) ((en))

Cite article

Bruckmeier, K. & Wiemers, J. (2014): Begrenzte Reichweite: Die meisten Aufstocker bleiben trotz Mindestlohn bedürftig. (IAB-Kurzbericht 07/2014), Nürnberg, 8 p.