DP13005 The regional effects of Germany's national minimum wage

Author(s): Gabriel Ahlfeldt, Duncan Roth, Tobias Seidel
Publication Date: June 2018
Keyword(s): Difference-in-Differences, employment, Germany, minimum wage, Wage inequality
JEL(s): J31, J58, R12
Programme Areas: Labour Economics, International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=13005

We estimate the spatially differential effects of a nationally uniform minimum wage that was introduced in Germany in 2015. To this end, we use a micro data set covering the universe of employed and unemployed individ-uals in Germany from 2011 to 2016 and a difference-in-differences based identification strategy that controls for heterogeneity in pre-treatment outcome trends. We find that the policy led to spatial wage convergence, in par-ticular in the left tail of the distribution, without reducing relative employment in low-wage regions within the first two years.