Minimum Wages, Productivity, and Reallocation

Mirja Haelbig (mirja.haelbig@iwh-halle.de), Matthias Mertens and Steffen Müller (steffen.mueller@iwh-halle.de)
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Mirja Haelbig: IWH Halle
Steffen Müller: IWH Halle
Authors registered in the RePEc Author Service: Steffen Mueller

No 16160, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry×region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.

Keywords: minimum wage; firm productivity; output prices; factor reallocation (search for similar items in EconPapers)
JEL-codes: D24 J31 L11 L25 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2023-05
New Economics Papers: this item is included in nep-bec, nep-eec, nep-eff, nep-inv, nep-lma and nep-mfd
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Working Paper: Minimum wages, productivity, and reallocation (2024)
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