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Evaluating the German "Mini-Job" Reform Using a True Natural Experiment

Marco Caliendo () and Katharina Wrohlich ()

No 2041, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Increasing work incentives for people with low incomes is a common topic in the policy debate across European countries. The "Mini-Job" reform in Germany – introduced on April 1, 2003 – can be seen in line with these policies, exempting labour income below a certain threshold from taxes and employees’ social security contributions. We carry out an ex-post evaluation to identify the short-run effects of this reform. Our identification strategy uses an exogenous variation in the interview months in the German Socio-Economic Panel, that allows us to distinguish groups that are (or are not) affected by the reform. To account for seasonal effects we additionally use a difference-in-differences strategy. The results show that the short-run effects of the reform are limited. We find no significant short-run effects for marginal employment. However, there is evidence that single men who are already employed react immediately and increase secondary job holding.

Keywords: evaluation; natural experiment; marginal employment; difference-in-differences (search for similar items in EconPapers)
JEL-codes: C25 H31 J68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-exp, nep-lab and nep-pbe
Date: 2006-03
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Published in: Applied Economics, 2010, 42(19), 2475–2489

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Journal Article: Evaluating the German 'Mini-Job' reform using a natural experiment (2010) Downloads
Working Paper: Evaluating the German "Mini-Job" Reform Using a True Natural Experiment (2006) Downloads
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