Minimum wages as a barrier to entry: Evidence from Germany

Arbeitspapier

This study analyses employers' support for the introduction of industry-specific minimum wages as a cost-raising strategy in order to deter market entry. Using a unique data set consisting of 800 firms in the German service sector, we find some evidence that high-productivity employers support minimum wages. We further show that minimum wage support is higher in industries and regions with low barriers to entry. This is particularly the case in East Germany, where the perceived threat of low-wage competition from Central and Eastern European Countries is relatively high. In addition, firms paying collectively agreed wages are more strongly in favour of minimum wages if union coverage is low and the mark-up of union wage rates is high.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6484

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: Public Policy ; Labor-Management Relations, Trade Unions, and Collective Bargaining: General ; Monopolization; Horizontal Anticompetitive Practices ; Industry Studies: Services: General
• Subject: minimum wage ; product market competition ; service sector ; Mindestlohn ; Unternehmer ; Dienstleistungssektor ; Wettbewerb ; Markteintritt ; Deutschland ; Neue Bundesländer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bachmann, Ronald ; Bauer, Thomas K. ; Kroeger, Hanna
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/58901
• URN: urn:nbn:de:101:1-2012080812266
• Last update: 10.03.2025, 11:44 AM CET