Would a Legal Minimum Wage Reduce Poverty? A Micro-simulation Study for Germany

Kai-Uwe Müller () and Viktor Steiner ()
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Kai-Uwe Müller: German Institute for Economic Research (DIW Berlin)
Viktor Steiner: Free University of Berlin, DIW Berlin and IZA

Journal of Income Distribution, 2009, vol. 18, issue 3-4, 131-151

Abstract: In view of rising poverty rates, the introduction of a legal minimum wage has become an important policy issue in Germany. We analyze the distributional effects of a nationwide minimum wage of 7.50e per hour based on a micro-simulation model accounting for interactions between wages, the tax-benefit system, and net household incomes. Due to the existing system of means-tested income support, the minimum wage would be ineffective in reducing poverty in the overall population, although poverty among singles and families with children or with a female household head would be slightly reduced.

Keywords: minimum wage; working poor; poverty reduction; micro-simulation (search for similar items in EconPapers)
JEL-codes: H31 I32 J32 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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