Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights from a Survey Experiment

Mario Bossler, Michael Oberfichtner and Claus Schnabel

No 11747, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The effects of large minimum wage increases, like those planned in the UK and in some US states, are still unknown. We conduct a survey experiment that randomly assigns increases or decreases in minimum wages to about 6,000 establishments in Germany and asks the personnel managers about their expectations concerning employment adjustments. We find that employment reacts asymmetrically to positive and negative changes in minimum wages. The larger the increase in the minimum wage is, the larger the expected reduction in employment. Employment adjustments are more pronounced in those industries and plants which are more strongly affected by the current minimum wage and in those plants that have neither collective agreements nor a works council. In contrast, employment is not found to increase if the minimum wage is reduced by about 10 percent. This mainly reflects that plants with works councils and collective agreements would not cut wages.

Keywords: establishment survey; wage cuts; minimum wage; Germany (search for similar items in EconPapers)
JEL-codes: D22 J23 J31 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2018-08
New Economics Papers: this item is included in nep-eur, nep-exp, nep-hrm and nep-lma
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Forthcoming - published in: Labour, 2020, 34 (3), 323-346

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Related works:
Journal Article: Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights From a Survey Experiment (2020)
Working Paper: Employment adjustments following rises and reductions in minimum wages: New insights from a survey experiment (2018)
Working Paper: Employment adjustments following rises and reductions in minimum wages: New insights from a survey experiment (2018)
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