Short-Term macroeconomic evaluation of the German minimum wage with a VAR/VECM
Alexander Herzog-Stein () and
No 197-2019, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute
The German minimum wage was introduced in January 2015. This paper investigates the short-term macroeconomic impacts of its introduction. Therefore, an estimated VAR/VECM is used to perform forecasts that are interpreted as counterfactual to the introduction of the minimum wage and compared to actual developments of six key macroeconomic variables. The deviations are interpreted as minimum wage effects. Robustness checks as well as a comparison with descriptive empirical results are performed to assess the validity of the results. Overall, small positive price effects, significant positive wage effects, and positive employment effects although not robustly estimated in their magnitude are found.
Keywords: Minimum Wage; VAR; VECM; Wage; Price; Employment; Macroeconomics; Germany (search for similar items in EconPapers)
JEL-codes: E65 E24 E17 E01 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:197-2019
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