The short- and medium-term distributional effects of the German minimum wage reform

Marco Caliendo, Alexandra Fedorets, Malte Preuss (), Carsten Schröder and Linda Wittbrodt ()
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Malte Preuss: German Council of Economic Experts
Linda Wittbrodt: University of Potsdam

Empirical Economics, 2023, vol. 64, issue 3, No 5, 1149-1175

Abstract: Abstract This study quantifies the distributional effects of the minimum wage introduced in Germany in 2015. Using detailed Socio-Economic Panel survey data, we assess changes in the hourly wages, working hours, and monthly wages of employees who were entitled to be paid the minimum wage. We employ a difference-in-differences analysis, exploiting regional variation in the “bite” of the minimum wage. At the bottom of the hourly wage distribution, we document wage growth of 9% in the short term and 21% in the medium term. At the same time, we find a reduction in working hours, such that the increase in hourly wages does not lead to a subortionate increase in monthly wages. We conclude that working hours adjustments play an important role in the distributional effects of minimum wages.

Keywords: Minimum wage; Wage distribution; Hourly wages; Inequality (search for similar items in EconPapers)
JEL-codes: J22 J31 J38 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s00181-022-02288-4

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