TY - UNPB

T1 - Minimum Wage in Germany

T2 - Countering the Wage and Employment Gap between Migrants and Natives?

AU - Ingwersen, K.

AU - Thomsen, S.L.

N1 - Funding Information: We are grateful to Joseph-Simon Görlach (Bocconi University), Regina T. Riphahn (University of Erlangen-Nuremberg) and Marian Rümmele (University of Tübingen) for their helpful comments at the annual conference of the European Economic Association (EEA), Milan/ITA 2022. This study has further benefited from discussions at the conference of the Asian and Australasian Society of Labour Economics (AASLE), Tokyo/JPN 2022. We also would like to thank Marco Caliendo (University of Potsdam) for his methodological advice.

PY - 2023

Y1 - 2023

N2 - This paper investigates the effects of the introduction of a statutory minimum wage in Germany on the wages and employment of migrants. Migrants are an overrepresented group in the low-wage sector and can be expected to particularly benefit from a minimum wage. We combine a "differential trend adjusted difference-in-differences estimator" (DTADD) and descriptive evidence to evaluate the impact of the minimum wage introduction in 2015 on hourly wages, monthly salaries, working hours and changes in employment and wage distribution. Contrary to expectations, our results show that the introduction of the minimum wage has weakened the position of migrants in the low-wage sector compared to their native counterparts. We observe an increase in part-time employment, a less pronounced decline in unemployment and a greater reduction in weekly working hours among migrants. The introduction of the minimum wage caused a temporary convergence in hourly wages between migrants and natives, which subsequently turned into a wage divergence. Migrant men in the low-wage sector have been particularly negatively affected by the introduction of the minimum wage. Moreover, increasing hourly wages have not translated into higher monthly salaries, thus widening wage inequality between migrants and natives.

AB - This paper investigates the effects of the introduction of a statutory minimum wage in Germany on the wages and employment of migrants. Migrants are an overrepresented group in the low-wage sector and can be expected to particularly benefit from a minimum wage. We combine a "differential trend adjusted difference-in-differences estimator" (DTADD) and descriptive evidence to evaluate the impact of the minimum wage introduction in 2015 on hourly wages, monthly salaries, working hours and changes in employment and wage distribution. Contrary to expectations, our results show that the introduction of the minimum wage has weakened the position of migrants in the low-wage sector compared to their native counterparts. We observe an increase in part-time employment, a less pronounced decline in unemployment and a greater reduction in weekly working hours among migrants. The introduction of the minimum wage caused a temporary convergence in hourly wages between migrants and natives, which subsequently turned into a wage divergence. Migrant men in the low-wage sector have been particularly negatively affected by the introduction of the minimum wage. Moreover, increasing hourly wages have not translated into higher monthly salaries, thus widening wage inequality between migrants and natives.

UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-85147223742&partnerID=MN8TOARS

U2 - 10.2139/ssrn.4310231

DO - 10.2139/ssrn.4310231

M3 - Working paper/Discussion paper

T3 - IZA discussion papers

BT - Minimum Wage in Germany

ER -