Effects of the German Minimum Wage on Earnings and Working Time Using Establishment Data

This study examines the short-term effects of the introduction of a statutory minimum wage in Germany on hourly wages, monthly wages and paid working hours. We exploit a novel panel dataset by linking the Structure of Earnings Survey (SES) 2014 and the Earnings Survey (ES) 2015 and apply a difference-in-differences approach at the establishment level. The results indicate an effect of the introduction of the statutory minimum wage on the average hourly wages of employees in minimum wage establishments of up to 5.9%. Due to negative effects on average working time of approximately minus 3.1%, the effects on monthly gross earnings are smaller but still amount to up to 2.7% on average. The results further suggest that the minimum wage effects on earnings were greater among low-wage employees than on average, in eastern Germany than in western Germany, and among part-time employees and marginal employees than among full-time employees.