The Effects of Germany’s Statutory Minimum Wage on Employment and Welfare Dependency

Schmitz Sebastian
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Schmitz Sebastian: German Federal Ministry for Economic Affairs and Energy,Berlin, Germany

German Economic Review, 2019, vol. 20, issue 3, 330-355

Abstract: In January 2015, Germany introduced a federal, statutory minimum wage of 8.50 € per hour. This study evaluates the effects of this policy on regular and marginal employment and on welfare dependency. Based on the county-level administrative data, this study uses the difference-in-differences technique, exploiting regional variation in the bite of the minimum wage, i.e., the county-specific share of employees paid less than 8.50 € before the introduction of the minimum wage. The minimum wage had a considerable negative effect on marginal employment. There is also some indication that regular employment was slightly reduced. Concerning welfare dependency, the minimum wage reduced the number of working welfare recipients, with some indication that about one half of them left welfare receipt due to the minimum wage.

Keywords: Minimum wages; welfare dependency; labor supply; Germany (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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DOI: 10.1111/geer.12196

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