Price Effects of the Minimum Wage: A Survey Data Analysis for the German Construction Sector

Utilizing the link between employment and price changes as a result of minimum wages, we use firm‐level data to evaluate the effect of minimum wage introduction in the German construction sector. In East Germany we find significant positive price effects that exclude the possibility of rising employ...

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Bibliographic Details
Published in:Labour (Rome, Italy) Italy), 2015-09, Vol.29 (3), p.310-326
Main Authors: Werner, Thomas, Sell, Friedrich L.
Format: Article
Language:English
Subjects:
Analysis
Construction activity
Construction Industry
Data analysis
Economic theory
Employment
Evaluation
Federal Republic of Germany
German Democratic Republic
Germany (West)
J08
J38
J42
J48
Labor Market
Labour market
Minimum Wage
Minimum wages
Price level changes
Studies
Surveys
Wages & salaries
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Summary:Utilizing the link between employment and price changes as a result of minimum wages, we use firm‐level data to evaluate the effect of minimum wage introduction in the German construction sector. In East Germany we find significant positive price effects that exclude the possibility of rising employment. Rather, the results indicate the existence of a competitive sector‐specific labour market, and thus declining employment. In contrast, we cannot find any significant price reaction for West Germany. This suggests that the implemented minimum wage in West Germany is too low in comparison to the predominantly paid wages and is hence not binding.
ISSN:1121-7081
1467-9914
DOI:10.1111/labr.12058