Get access

The Employment Effect of Industry-Specific, Collectively Bargained Minimum Wages

Authors


Address for correspondence: Hanna Frings, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Hohenzollernstr. 1-3, 45128 Essen, Germany. Tel.: +49 201 8149 265; fax: +49 201 8149 200; e-mail: hanna.frings@rwi-essen.de

Abstract

This study estimates the employment effects of industry-specific, collectively bargained minimum wages in Germany for two occupations associated with the construction sector. I propose a truly exogenous control group in contrast to the control group design used in the literature. Further, a difference-in-differences-in-differences estimator is presented as a robustness test for occupation-specific and/or industry-specific, time-varying, unobserved heterogeneity. I do not find a significantly negative employment effect, even though the minimum wage is binding in (East) Germany. Possible explanations include substitution effects, non-compliance and models of monopsonic competition.

Get access to the full text of this article

Ancillary