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The Impact of the Minimum Wage on Working Hours

Burauel Patrick (), Markus Grabka (), Carsten Schröder (), Marco Caliendo (), Obst Cosima () and Preuss Malte ()
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Obst Cosima: University of Potsdam, Potsdam, Germany
Preuss Malte: Free University Berlin, Berlin, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2020, vol. 240, issue 2-3, 233-267

Abstract: The present paper analyzes how the statutory minimum wage introduced on January 1, 2015, has affected working hours in Germany up to 2016. The data used come from the Socio-Economic Panel (SOEP), which provides not only contractual working hours but also actual hours worked. Using a difference-in-differences estimation approach, we find a significant and robust reduction in contractual working hours among employees who are subject to social security contributions and earned less than the minimum wage before the introduction. The effect in 2015 is about −5 % and corresponds to a 1.7 hours reduction in average weekly working hours. The effect on actual hours is smaller and estimated less precisely. Extending the analysis until 2016 does not yield significant effects on contractual or actual working hours, while some specifications reject the common trend assumption.

Keywords: minimum wage; working hours; DiD estimation (search for similar items in EconPapers)
JEL-codes: J23 J38 J81 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/jbnst-2018-0081

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