Arbeitspapier

Distributional effects of a minimum wage in a welfare state: The case of Germany

A popular argument for a federal minimum wage is that it will prevent in-work poverty and reduce income inequality. We examine this assertion for Germany, a welfare state with a relative generous means-tested social minimum and high marginal tax rates. Our analysis is based on a microsimulation model that accounts for the interactions between wages, the tax-benefit system and net incomes at the household level as well as employment and price effects on the distribution of incomes induced by the introduction of a minimum wage. We show that the impact of even a relatively high federal minimum wage on disposable incomes is small because low wage earners are scattered over the whole income distribution and wage increases would to a large extent be offset by reductions in means-tested welfare transfers and high marginal tax rates. Taking into account negative employment effects and increases in consumer prices induced by the minimum wage would wipe out any positive direct effects on net incomes of households affected by the minimum wage.

Sprache
Englisch

Erschienen in
Series: SOEPpapers on Multidisciplinary Panel Data Research ; No. 617

Klassifikation
Wirtschaft
Measurement and Analysis of Poverty
Fiscal Policies and Behavior of Economic Agents: Household
Wage Level and Structure; Wage Differentials
Thema
minimum wage
employment effects
income distribution
inequality
microsimulation

Ereignis
Geistige Schöpfung
(wer)
Müller, Kai-Uwe
Steiner, Viktor
Ereignis
Veröffentlichung
(wer)
Deutsches Institut für Wirtschaftsforschung (DIW)
(wo)
Berlin
(wann)
2013

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Müller, Kai-Uwe
  • Steiner, Viktor
  • Deutsches Institut für Wirtschaftsforschung (DIW)

Entstanden

  • 2013

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