Fiscal Effects of Minimum Wages – An Analysis for Germany

Thomas Bauer (), Jochen Kluve, Sandra Schaffner and Christoph Schmidt

No 79, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Against the background of the current discussion on the introduction of statutory minimum wages in Germany, this paper analyzes the potential employment and fiscal effects of such a policy. Based on estimated labor demand elasticities obtained from a structural labor demand model, the empirical results imply that the introduction of minimum wages in Germany will be associated with significant employment losses that are concentrated among marginal and low- and semi-skilled full-time workers. Even though minimum wages will lead to increased public revenues from income taxes and social security benefits, they will result in a significant fiscal burden, due to increased expenditures for unemployment benefits and decreased revenues from corporate taxes.

Keywords: Minimum wages; employment; public budget; fiscal effects (search for similar items in EconPapers)
JEL-codes: H60 J31 J88 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Fiscal Effects of Minimum Wages: An Analysis for Germany (2009)
Journal Article: Fiscal Effects of Minimum Wages: An Analysis for Germany (2009)
Working Paper: Fiscal Effects of Minimum Wages: An Analysis for Germany (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:79

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