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Title:Minimum wages as a barrier to entry: Evidence from Germany PDF Logo
Authors:Bachmann, Ronald
Bauer, Thomas K.
Kroeger, Hanna
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6484
Abstract:This study analyses employers' support for the introduction of industry-specific minimum wages as a cost-raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we find some evidence that high-productivity employers support minimum wages. We further show that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low-wage competition from Central and Eastern European Countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages if union coverage is low and the mark-up of union wage rates is high.
Subjects:minimum wage
product market competition
service sector
JEL:J38
J50
L41
L80
Persistent Identifier of the first edition:urn:nbn:de:101:1-2012080812266
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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