The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector

Bodo Aretz, Melanie Arntz and Terry Gregory

No 7047, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.

Keywords: labour-labour substitution; capital-labour substitution; Germany; minimum wage; scale effect (search for similar items in EconPapers)
JEL-codes: J21 J23 J38 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012-11
New Economics Papers: this item is included in nep-eur, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - published in: German Economic Review, 2013, 14 (3), 282-315.

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Related works:
Journal Article: The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector (2013)
Journal Article: The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector (2013)
Working Paper: The minimum wage affects them all: Evidence on employment spillovers in the roofing sector (2012)
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