Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58901 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6484
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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: 
Document Type: 
Working Paper

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