Minimum Wages as a Barrier to Entry: Evidence from Germany

Ronald Bachmann, Thomas Bauer () and Hanna Kroeger ()
Additional contact information
Hanna Kroeger: RWI
Authors registered in the RePEc Author Service: Hanna Frings

No 6484, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study analyses employers' support for the introduction of industry-specific minimum wages as a cost-raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we find some evidence that high-productivity employers support minimum wages. We further show that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low-wage competition from Central and Eastern European Countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages if union coverage is low and the mark-up of union wage rates is high.

Keywords: service sector; product market competition; minimum wage (search for similar items in EconPapers)
JEL-codes: J38 J50 L41 L80 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-04
New Economics Papers: this item is included in nep-eur, nep-hme, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Labour, 2014, 28 (3), 338-357

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Related works:
Journal Article: Minimum Wages as a Barrier to Entry: Evidence from Germany (2014)
Working Paper: Minimum Wages as a Barrier to Entry – Evidence from Germany (2012)
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