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The Causal Effects of the Minimum Wage Introduction in Germany - An Overview

Author

Listed:
  • Marco Caliendo

    (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg)

  • Carsten Schröder

    (SOEP at DIW Berlin)

  • Linda Wittbrodt

    (University of Potsdam)

Abstract
In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short-run effects of this new minimum wage on a wide set of socio-economic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self-employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non-compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low-wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialized in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non-compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide-reaching policy.

Suggested Citation

  • Marco Caliendo & Carsten Schröder & Linda Wittbrodt, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany - An Overview," CEPA Discussion Papers 01, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:01
    DOI: 10.25932/publishup-42692
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    More about this item

    Keywords

    Minimum Wage; Evaluation; Earnings; Working Hours; Employment;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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