Employment effects of a sectoral minimum wage in Germany

Arbeitspapier

In this paper employment effects of a sectoral minimum wage in the German construction sector are estimated from a single cross-sectional wage distribution using parametric and semi-parametric models. Parametric functional form assumptions seem too restrictive and lead to implausible results. We suggest semi-parametric censored quantile regression models to relax these assumptions and find that employment levels would be 4-5% higher without the minimum wage in the East German construction sector. That the effect for the West is clearly smaller (only 1-2%) is theoretically plausible, since the level of the minimum wage in East Germany was set much higher in relation to the wage distribution. There is heterogeneity hidden in the mean effect: employment losses are mostly borne by young construction workers, employees not covered by collective bargaining agreements and individuals working in small establishments. Although the paper confirms previous findings of a negative employment effect for East Germany, its magnitude is substantially larger than previously estimated.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1061

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Wage Level and Structure; Wage Differentials ; Wages, Compensation, and Labor Costs: Public Policy
• Subject: Minimum wage ; wage distribution ; employment effects ; labor demand ; Mindestlohn ; Bauwirtschaft ; Wirkungsanalyse ; Beschäftigungseffekt ; Lohnstruktur ; Arbeitsnachfrage ; Neue Bundesländer ; Alte Bundesländer ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Müller, Kai-Uwe
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/49410
• Last update: 10.03.2025, 11:45 AM CET