Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170766
Authors: 
Vom Berge, Philipp
Frings, Hanna
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 10782
Abstract: 
We estimate the effects of the introduction and subsequent increases of a substantial minimum wage in Germany's main construction industry on wage and employment growth rates. Using a regional dataset constructed from individual employment histories, we exploit the spatial dimension and border discontinuities of the regional data to account for spillovers between districts and unobserved heterogeneity at the local level. The results indicate that the minimum wage increased the wage growth rate for East Germany but did not have a significant impact on the West German equivalent. The estimated effect on the employment growth rate reveals a contraction in the East of about 1.2 percentage points for a one-standard-deviation increase in the minimum-wage bite, amounting to roughly one quarter of the overall decline in the growth rate. We observe no change for the West.
Subjects: 
construction sector
Germany
minimum wage
spatial heterogeneity
spatial panel data
JEL: 
J31
J38
Document Type: 
Working Paper

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