Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/181311 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7111
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German establishments for the period 1999-2014. Particularly in small establishments (0-9 employees), subsidized Minijob employment comprises large shares of the work force, on average over 40 percent. For these establishments, robust evidence shows that increasing the subsidization of Minijob employment crowds out non-subsidized employment. Our results imply that Minijob employment in 2014 may have eliminated more than 0.5 million unsubsidized employment relationships just in small establishments.
Subjects: 
wage subsidy
Minijob
labor demand
substitution effect
crowding out effect
displacement effect
employment
payroll tax
JEL: 
J21
J23
J38
C26
Document Type: 
Working Paper
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