Labor Market Frictions and Spillover Effects from Publicly Announced Sectoral Minimum Wages

Gökay Demir ()
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Gökay Demir: IZA

No 17510, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the horizontal spillover effects of Germany's first sectoral minimum wage. Using a difference-in-differences estimation, I examine the impact of the public announcement and introduction of the minimum wage on sub-minimum wage workers in related jobs outside the minimum wage sector, defined using employment flows. I find an increase in wages and job-to-job transitions for sub-minimum wage workers in related jobs. The spillover effects are driven by workers who reallocate to better-paying establishments, have low labor market experience, and are more closely connected to the minimum wage sector by having former coworkers in that sector.

Keywords: spillover; outside option; labor market frictions; minimum wages (search for similar items in EconPapers)
JEL-codes: J31 J38 J42 J62 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2024-12
New Economics Papers: this item is included in nep-inv and nep-lma
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