Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights from a Survey Experiment

24 Pages Posted: 18 Sep 2020

See all articles by Mario Bossler

Mario Bossler

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Michael Oberfichtner

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Claus Schnabel

University of Erlangen-Nuremberg; IZA Institute of Labor Economics

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Date Written: September 2020

Abstract

The effects of large minimum wage increases are still unknown. Our survey experiment randomly assigns increases or decreases in minimum wages to German establishments and asks about employers’ expectations concerning employment adjustments. The larger the increase in the minimum wage is, the larger the expected reduction in employment. The reduction is stronger in plants that are more strongly affected by the current national minimum wage and in plants that have neither collective agreements nor a works council. In contrast, employment expectations do not increase if the minimum wage is reduced. This mainly reflects that few plants would cut wages.

Suggested Citation

Bossler, Mario and Oberfichtner, Michael and Schnabel, Claus, Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights from a Survey Experiment (September 2020). LABOUR, Vol. 34, Issue 3, pp. 323-346, 2020, Available at SSRN: https://ssrn.com/abstract=3694515 or http://dx.doi.org/10.1111/labr.12168

Mario Bossler (Contact Author)

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Michael Oberfichtner

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, DE 91054
Germany

Claus Schnabel

University of Erlangen-Nuremberg ( email )

Institut für Wirtschaftsforschung
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D-90403 Nuernberg
Germany
+49 911 5302 330 (Phone)
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HOME PAGE: http://https://www.arbeitsmarkt.rw.fau.de/english-version/staff/prof-dr-claus-schnabel/

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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