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Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata

Mario Bossler () and Hans-Dieter Gerner

ILR Review, 2020, vol. 73, issue 5, 1070-1094

Abstract: The authors present the first evidence on the consequences of the new statutory minimum wage in Germany, which was implemented on January 1, 2015. Using the IAB Establishment Panel, they identify employment effects from variation in the extent that establishments are affected by the minimum wage. A difference-in-differences estimation reveals an increase in average wages between 3.8% and 6.3% and an employment loss by approximately 1.7% in establishments affected by the minimum wage. These estimates imply a labor demand elasticity with respect to wages ranging between −0.2 and −0.4. The authors also observe a transitory reduction of the working hours in the first year after the introduction and that the employment effect seems mostly driven by a reduction in hires rather than by an increase in layoffs.

Keywords: minimum wage; employment evaluation; difference-in-differences; Germany (search for similar items in EconPapers)
Date: 2020
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Working Paper: Employment effects of the new German minimum wage: evidence from establishment-level micro data (2016) Downloads
Working Paper: Employment effects of the new German minimum wage: Evidence from establishment-level micro data (2016) Downloads
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DOI: 10.1177/0019793919889635

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