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Title:Fiscal effects of minimum wages: an analysis for Germany PDF Logo
Authors:Bauer, Thomas K.
Kluve, Jochen
Schaffner, Sandra
Schmidt, Christoph M.
Issue Date:2008
Series/Report no.:IZA discussion papers 3875
Abstract:Against the background of the current discussion on the introduction of statutory minimum wages in Germany, this paper analyzes the potential employment and fiscal effects of such a policy. Based on estimated labor demand elasticities obtained from a structural labor demand model, the empirical results imply that the introduction of minimum wages in Germany will be associated with significant employment losses that are concentrated among marginal and low- and semi-skilled full-time workers. Even though minimum wages will lead to increased public revenues from income taxes and social security benefits, they will result in a significant fiscal burden, due to increased expenditures for unemployment benefits and decreased revenues from corporate taxes.
Subjects:Minimum wages
employment
public budget
fiscal effects
JEL:H60
Persistent Identifier of the first edition:urn:nbn:de:101:1-20081217122
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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