The Devil Is in the Details: Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs

Mario Bossler (), Ying Liang () and Thorsten Schank
Additional contact information
Mario Bossler: Institute for Employment Research (IAB), Nuremberg
Ying Liang: University of Mainz

No 16964, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In 2015, Germany introduced a national minimum wage. While the literature agrees on at most limited negative effects on the overall employment level, we go into detail and analyze the impact on the working hours dimension and on the subset of minijobs. Using data from the German Structure of Earnings Survey in 2010, 2014, and 2018, we find empirical evidence that the minimum wage significantly reduces inequality in hourly and monthly wages. While various theoretical mechanisms suggest a reduction in working hours, these remain unchanged on average. However, minijobbers experience a notable reduction in working hours which can be linked to the specific institutional framework. Regarding employment, the results show no effects for regular jobs, but there is a noteworthy decline in minijobs, driven by transitions to regular employment and non-employment. The transitions in non-employment imply a wage elasticity of employment of −0.1 for minijobs. Our findings highlight that the institutional setting leads to heterogeneous effects of the minimum wage.

Keywords: minimum wage; working hours; monthly wages; hourly wages; minijobs (search for similar items in EconPapers)
JEL-codes: J21 J31 J38 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2024-04
New Economics Papers: this item is included in nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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