Mind the gap: Effects of the national minimum wage on the gender wage gap in Germany

Ramona Schmid

No 06-2022, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

Abstract: With its introduction in 2015, the statutory minimum wage in Germany intends to benefit primarily low-wage workers. Thus, this paper aims at estimating the effectiveness of the im- plemented wage floor on gender wage gaps in the lower half of the wage distribution. Using administrative data, distinct regional differences regarding magnitudes of wage differentials and responses to the minimum wage are identified. Overall, wage gaps between men and women at the 10th percentile decrease by 2.46 and 6.34 percentage points respectively in the West and East of Germany after 2015. Applying counterfactual wage distributions, the study provides new evidence that around 60% and even 95% of the decline result from the introduction of the minimum wage in each region. Further, group-specific analyses identify concrete responses on the basis of age, educational level and occupational activity. Having yearly data, the study ad- ditionally reveals new results on the impact of the successive minimum wage raises in 2017 and 2019. Counterfactual aggregate decompositions of gender wage gaps finally indicate a decrease in discriminatory remuneration structures in the West of Germany due to the introduced wage floor.

Keywords: Gender Wage Gap; Minimum Wage; Germany (search for similar items in EconPapers)
JEL-codes: J16 J31 J38 J71 J78 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eur, nep-gen and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hohdps:062022

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