How effective are enforcement measures for compliance with the minimum wage? Evidence from Germany

Mario Bossler, Ursula Jaenichen and Simeon SchÃ¤chtele
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Ursula Jaenichen: Institute for Employment Research (IAB), Germany
Simeon SchÃ¤chtele: Inter-American Development Bank (IDB),* USA

Economic and Industrial Democracy, 2022, vol. 43, issue 2, 943-971

Abstract: The extent of non-compliance with minimum wages is heavily debated, but little is known about the effectiveness of enforcement measures. Following the introduction of a national minimum wage in Germany in 2015, employers in a catalogue of industries deemed at high risk of non-compliance were subject to more stringent enforcement requirements, such as an obligation to record hours worked. Using national administrative employment data, in this study the authors exploit the variation in enforcement measures to analyze the effect on non-compliance. As an empirical strategy, they balance jobs from industries with stricter enforcement measures with jobs from other industries and apply difference-in-differences estimations. The evidence points to a small compliance-enhancing effect of the enforcement measures. The gains in compliance are not offset by more pronounced employment losses in those industries subject to stricter enforcement.

Keywords: Compliance; difference-in-differences; enforcement; entropy balancing; minimum wage (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecoind:v:43:y:2022:i:2:p:943-971

DOI: 10.1177/0143831X20962193

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