Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173199
Authors: 
Holtemöller, Oliver
Pohle, Felix
Year of Publication: 
2017
Series/Report no.: 
IWH Discussion Papers 28/2017
Abstract: 
This paper contributes to the empirical literature on the employment effects of minimum wages. We analysed the introduction of a statutory minimum wage in Germany in 2015 exploiting cross-sectional variation of the minimum wage affectedness. We construct two variables that measure the affectedness for approximately 300 state-industry combinations based on aggregate monthly income data. The estimation strategy consists of two steps. We test for (unidentified) structural breaks in a model with cross-section specific trends to control for state-industry specific developments prior to 2015. In a second step, we test whether the trend deviations are correlated with the minimum wage affectedness. To identify the minimum wage effect on employment, we assume that the minimum wage introduction is exogenous. Our results point towards a negative effect on marginal employment and a positive effect on socially insured employment. Furthermore, we analyse if the increase in socially insured employment is systematically related to the reduction of marginal employment but do not detect evidence.
Subjects: 
minimum wage
employment effects
minimum wage affectedness
structural break model
JEL: 
C21
E24
J38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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