The Price and Employment Response of Firms to the Introduction of Minimum Wages

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No 15701, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies the price and employment response of firms to the introduction of a nation-wide minimum wage in Germany. Widely throughout the economy, affected firms responded by rapidly and frequently increasing prices without cutting employment. These decisions are strongly interrelated: Firms that increased prices relatively more often also showed a less negative employment response. The relative importance of both adjustment margins is associated with product market competition and the specific economic situation firms face during the treatment period. Hence, understanding the role of price pass-through appears to be key for explaining employment effects of minimum wages.

Keywords: employment; price pass-through; minimum wage; interrelation of firms' choices (search for similar items in EconPapers)
JEL-codes: E24 E31 J31 J38 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2022-11
New Economics Papers: this item is included in nep-com and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Journal of Public Economics, 2024, 239, 105236

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https://docs.iza.org/dp15701.pdf (application/pdf)

Related works:
Journal Article: The price and employment response of firms to the introduction of minimum wages (2024)
Working Paper: The Price and Employment Response of Firms to the Introduction of Minimum Wages (2019)
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