High-Impact Minimum Wages and Heterogeneous Regions

Philipp Vom Berge () and Hanna Frings
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Philipp Vom Berge: Institute for Employment Research (IAB), Nuremberg

No 10782, IZA Discussion Papers from IZA Network @ LISER

Abstract: We estimate the effects of the introduction and subsequent increases of a substantial minimum wage in Germany's main construction industry on wage and employment growth rates. Using a regional dataset constructed from individual employment histories, we exploit the spatial dimension and border discontinuities of the regional data to account for spillovers between districts and unobserved heterogeneity at the local level. The results indicate that the minimum wage increased the wage growth rate for East Germany but did not have a significant impact on the West German equivalent. The estimated effect on the employment growth rate reveals a contraction in the East of about 1.2 percentage points for a one-standard-deviation increase in the minimum-wage bite, amounting to roughly one quarter of the overall decline in the growth rate. We observe no change for the West.

Keywords: minimum wage; Germany; construction sector; spatial heterogeneity; spatial panel data (search for similar items in EconPapers)
JEL-codes: J31 J38 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2017-05
New Economics Papers: this item is included in nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published - published in: Empirical Economics, 2020, 59, 701-729.

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Related works:
Journal Article: High-impact minimum wages and heterogeneous regions (2020)
Working Paper: High-Impact Minimum Wages and Heterogeneous Regions (2013)
Working Paper: High-Impact Minimum Wages and Heterogeneous Regions (2013)
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