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Employment effects of the new German minimum wage: Evidence from establishment-level micro data

Mario Bossler () and Hans-Dieter Gerner

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: In Germany a new statutory minimum wage of € 8.50 per hour of work was introduced on 1 January 2015. We identify employment effects using variation in the establishment-level affectedness. The data allow addressing anticipatory wage adjustments as well as spillover effects within and across workplaces. Difference-in-differences estimation reveals an increase in average wages by 4.8 percent and an employment reduction by about 1.9 percent in affected establishments. These estimates imply an employment elasticity with respect to wages of about -0.3. Looking at the associated labor flows, the employment effect seems mostly driven by a reduction in hires but also by a small increase in separations. Moreover, the employment neutral turnover rate decreases. When analyzing alternative adjustment margins, we observe a reduction in the typical contracted working hours but no effects on freelance employment.

JEL-codes: C23 J23 J38 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-law
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Related works:
Journal Article: Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata (2020) Downloads
Working Paper: Employment effects of the new German minimum wage: evidence from establishment-level micro data (2016) Downloads
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