Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69345
Authors: 
Aretz, Bodo
Arntz, Melanie
Gregory, Terry
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 7047
Abstract: 
This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.
Subjects: 
minimum wage
Germany
capital-labour substitution
labour-labour substitution
scale effect
JEL: 
J38
J21
J23
Document Type: 
Working Paper

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