Employment effects of the new German minimum wage

Abstract

"We present the first evidence on the consequences of the new statutory minimum wage in Germany. Using the IAB Establishment Panel, we identify employment effects from variation in the establishment-level bite of the minimum wage. A difference-in-differences estimation reveals an increase in average wages between 3.8 and 6.3 percent and an employment loss by approximately 1.7 percent in treated establishments. These estimates imply a labor demand elasticity with respect to wages ranging between 0.2 and 0.4. We also observe a transitory reduction of the contracted working hours in the first year after the introduction and that the employment effect seems mostly driven by a reduction in hires rather than by an increase in layoffs." (Author's abstract, IAB-Doku) ((en))

Cite article

Bossler, M. & Gerner, H. (2020): Employment effects of the new German minimum wage. Evidence from establishment-level micro data. In: ILR review, Vol. 73, No. 5, p. 1070-1094. DOI:10.1177/2F0019793919889635