Aretz, Bodo Arntz, Melanie Gregory, Terry Rammer, Christian
Year of Publication:
[Journal:] Journal for Labour Market Research [ISSN:] 2510-5027 [Volume:] 45 [Year:] 2012 [Issue:] 3/4 [Pages:] 233-256
The Minimum wage in the roofing sector, which was introduced in 1997 and transferred to a national and generally binding level in 2003, has particularly affected the sector in Eastern Germany, even in an international comparison. However, the concomitant effective cost burden is limited. Based on difference-in-differences estimations in comparison to an ancillary construction sector that is not affected by minimum wages as well as based on a comparison of workers in the roofing sector who have been affected by minimum wage introduction to different degrees, causal effects with regard to employment, worker protection and competition are investigated. The results show that the wage increases associated with the minimum wage introduction only partially compile into earnings increases. Moreover, the overall employment situation does not seem to change even though some negative employment results can be detected for workers affected by binding minimum wages. This might be due to the fact that, at least partially, cost increases caused by minimum wage introduction are transferred to the customers by increasing prices. Distinct effects on the competitive situation cannot be shown; however, there is a certain shift in the East German start-up activity and corporate structure toward single-person companies.