Minimum Wage Non-compliance: The Role of Co-determination
Laszlo Goerke and
Markus Pannenberg
Additional contact information
Markus Pannenberg: University of Applied Sciences Bielefeld
No 202304, IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU)
Abstract:
We analyse in what way co-determination affects non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no impact on the difference between the minimum wage and the amount, which was actually paid. Therefore, co-determination helps to secure the payment of minimum wages.
Keywords: : Co-determination; Labour Law; Minimum Wages; Socio-Economic Panel (SOEP); Non-compliance; Works Councils (search for similar items in EconPapers)
JEL-codes: J30 J53 K31 K42 M54 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2023-11
New Economics Papers: this item is included in nep-eur, nep-law and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://www.iaaeu.de/images/DiscussionPaper/2023_04.pdf First version, 2023 (application/pdf)
Related works:
Working Paper: Minimum Wage Non-Compliance: The Role of Co-Determination (2023) 
Working Paper: Minimum Wage Non-compliance: The Role of Co-determination (2023) 
Working Paper: Minimum Wage Non-compliance: The Role of Co-determination (2023) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:iaa:dpaper:202304
Access Statistics for this paper
More papers in IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU) Contact information at EDIRC.
Bibliographic data for series maintained by Adrian Chadi ().