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Turning the Switch: An Evaluation of the Minimum Wage in the German Electrical Trade Using Repeated Natural Experiments

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Abstract
The introduction, abolition and subsequent re-introduction of the minimum wage in the German electrical trade gave rise to series of natural experiments, which are used to study minimum wage effects. We find similar impacts in all three cases on wages, employment and the receipt of public welfare benefits. Average wages are raised by the minimum wage in East Germany, but there is almost no evidence for employment effects. The results also show that the wage effect is quickly undone after the abolition of the minimum wage.

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  • Bernhard Boockmann & Raimund Krumm & Michael Neumann & Pia Rattenhuber, 2012. "Turning the Switch: An Evaluation of the Minimum Wage in the German Electrical Trade Using Repeated Natural Experiments," IAW Discussion Papers 92, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:92
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    Cited by:

    1. Mario Bossler, 2017. "Employment expectations and uncertainties ahead of the new German minimum wage," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(4), pages 327-348, September.
    2. Mario Bossler & Hans-Dieter Gerner, 2020. "Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1070-1094, October.
    3. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Micheli, Martin, 2016. "Minimum wage: Redistributive or discriminatory policy?," VfS Annual Conference 2016 (Augsburg): Demographic Change 145830, Verein für Socialpolitik / German Economic Association.
    5. Kunaschk, Max, 2024. "The effects of minimum wages on employment and prices—Evidence from the hairdressing sector," Labour Economics, Elsevier, vol. 88(C).
    6. Alan Manning, 2013. "Minimum Wages: A View from the UK," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 14(1-2), pages 57-66, February.
    7. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa, 2018. "The German minimum wage: Effects on business expectations, profitability, and investments," FAU Discussion Papers in Economics 13/2018, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    8. Caliendo Marco & Wittbrodt Linda & Schröder Carsten, 2019. "The Causal Effects of the Minimum Wage Introduction in Germany – An Overview," German Economic Review, De Gruyter, vol. 20(3), pages 257-292, August.
    9. Böckerman, Petri & Juuti, Toni & Kosonen, Tuomas & Keränen, Henri, 2024. "Are Firms Willing to Pay Lower Wages? A Quasi-Experiment on Subminimum Wage Policy," IZA Discussion Papers 17453, Institute of Labor Economics (IZA).
    10. Gürtzgen, Nicole & Blömer, Maximilian & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard, 2016. "Estimating an Equilibrium Job Search Model for the German Labour Market," VfS Annual Conference 2016 (Augsburg): Demographic Change 145950, Verein für Socialpolitik / German Economic Association.
    11. Bredemeier, Christian & Juessen, Falko, 2012. "Minimum Wages and Female Labor Supply in Germany," IZA Discussion Papers 6892, Institute of Labor Economics (IZA).
    12. Kugler Franziska & Schwerdt Guido & Wößmann Ludger, 2014. "Ökonometrische Methoden zur Evaluierung kausaler Effekte der Wirtschaftspolitik," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(2), pages 105-132, June.
    13. Schmitz, Sebastian, 2017. "The effects of Germany's new minimum wage on employment and welfare dependency," Discussion Papers 2017/21, Free University Berlin, School of Business & Economics.
    14. Schumann, Mathias, 2017. "The effects of minimum wages on firm-financed apprenticeship training," Labour Economics, Elsevier, vol. 47(C), pages 163-181.
    15. Thomas Werner & Friedrich L. Sell, 2015. "Price Effects of the Minimum Wage: A Survey Data Analysis for the German Construction Sector," LABOUR, CEIS, vol. 29(3), pages 310-326, September.
    16. Börschlein, Erik-Benjamin & Bossler, Mario, 2019. "Eine Bilanz nach fünf Jahren gesetzlicher Mindestlohn: Positive Lohneffekte, kaum Beschäftigungseffekte (Five Years of statutory minimum wage in Germany: Significant wage effects, barely any employmen," IAB-Kurzbericht 201924, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Bernhard Boockmann & Michael Neumann & Pia Rattenhuber, 2012. "Mindestlohnregelungen im Maler- und Lackiererhandwerk: Eine Wirkungsanalyse [An impact analysis of the minimum wage in the German painter and varnisher trades]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 45(3), pages 331-353, December.
    18. Werner, Thomas & Sell, Friedrich L. & Reinisch, David C., 2013. "Price effects of minimum wages: Evidence from the construction sector in East and West Germany," Working Papers in Economics 2013,4, Bundeswehr University Munich, Economic Research Group.
    19. Kellermann, Kim Leonie, 2017. "Minimum wages and vocational training incentives in Germany," CIW Discussion Papers 3/2017, University of Münster, Center for Interdisciplinary Economics (CIW).
    20. Popp, Martin, 2024. "Minimum Wages in Concentrated Labor Markets," IZA Discussion Papers 17357, Institute of Labor Economics (IZA).
    21. Bellmann, Lutz & Bossler, Mario & Gerner, Hans-Dieter & Hübler, Olaf, 2015. "IAB-Betriebspanel: Reichweite des Mindestlohns in deutschen Betrieben (The New Federal Minimum Wage in Germany : Affectedness of German Establishments)," IAB-Kurzbericht 201506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    22. Blömer, Maximilian J. & Guertzgen, Nicole & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard J., 2018. "Unemployment effects of the German minimum wage in an equilibrium job search model," ZEW Discussion Papers 18-032, ZEW - Leibniz Centre for European Economic Research.

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    Keywords

    Minimum wage; labor market regulation; employment;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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