Minimum Wages in the Apprenticeship Market: Adverse Effects on Labor Demand?

Henrika Langen and Michael Doersam
Authors registered in the RePEc Author Service: Michael Dörsam

No 234, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: To strengthen vocational training and secure skilled labor, the German government introduced a statutory minimum wage for apprentices. Starting January 1, 2020, new apprentices became entitled to an annually increasing minimum wage. We merge apprenticeship posting data from the Federal Employment Agency with administrative register data on apprenticeship contracts to investigate the causal effect of this legislation on demand for apprentices. Leveraging regional variation in the share of apprenticeships paid at the minimum wage level, we estimate a standard difference-in-differences, a triple difference, and a synthetic difference-in-differences model. Our results show no significant effect on overall postings in low-wage occupations in districts with a high prevalence of minimum wage contracts. However, when examining selected low-wage occupations separately, we find substantial differences, with no observable impact in health and wellness or in agriculture, forestry, and farming, but a substantial decline in several low-wage production and manufacturing occupations. Placing the heterogeneity in the context of occupational differences in skilled labor shortages suggests that differences in shortage intensity account for a substantial part of the variation, though additional occupation-specific dynamics also contributed.

Keywords: minimum wage; apprenticeship market; labor demand; difference-in-differences; triple difference; synthetic difference-in-differences (search for similar items in EconPapers)
JEL-codes: J23 J3 M53 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2024-12
New Economics Papers: this item is included in nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0234

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