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A 22 percent increase in the German minimum wage: nothing crazy


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Leveraging the German Earnings Survey, a large and novel data source comprising around 8 million employee-level observations reported by employers each month, we apply a difference-in-difference-in-differences approach to analyze the policy's impact on hourly wages, monthly earnings, employment, and working hours. Our findings reveal significant positive effects on wages, affirming the policy's intended benefits for low-wage workers. The hours effect results in an implied labor demand elasticity in terms of the employment volume of -0.17 which only partially offsets the monthly wage gains.

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German minimum wage

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