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

Hanna Frings 1
  • 1 Rheinisch-Westfälisches Institut für Wirtschaftsforschung,, Essen, Germany

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.

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