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Introducing Minimum Wages in Germany: Employment Effects in a Post Keynesian Perspective
[working paper]
Corporate Editor
Universität Hamburg, Fak. Wirtschafts- und Sozialwissenschaften, FB Sozialökonomie, Zentrum für Ökonomische und Soziologische Studien (ZÖSS)
Abstract There has been a long discussion about the employment impact of minimum wages and this discussion has recently been renewed with the introduction of an economy-wide, binding minimum wage in Germany in 2015. In traditional reasoning, based on the allocational approach of modern labour market economic... view more
There has been a long discussion about the employment impact of minimum wages and this discussion has recently been renewed with the introduction of an economy-wide, binding minimum wage in Germany in 2015. In traditional reasoning, based on the allocational approach of modern labour market economics, it has been suggested that the impact is clearly negative on the assumption of a competitive labour market and clearly positive on the assumption of a monopsonistic labour market. Unfortunately, both predictions conflict with the empirical findings, which do not show a clear-cut impact of significant size in any direction. As an alternative, a Post Keynesian two-sector model including an employment market is presented here. Its most likely prediction of a negligible employment effect and a sectoral shift is tested against the German case of an introduction of a statutory minimum wage in 2015. Despite substantial wage increases in the low wage sector, our empirical analysis reveals very low overall employment loss of about 33,000 labourers as a result of a small sectoral shift from low wage industries to higher wage industries.... view less
Keywords
Keynesianism; minimum wage; supply; demand; effect on employment; allocation; theory; welfare; labor market; low wage; wage level; Federal Republic of Germany
Classification
Labor Market Policy
National Economy
Sociology of Work, Industrial Sociology, Industrial Relations
Free Keywords
Post Keynesianism; aggregate demand; aggregate supply
Document language
English
Publication Year
2018
City
Hamburg
Page/Pages
19 p.
Series
ZÖSS Discussion Paper, 68
ISSN
1868-4947
Status
Published Version; reviewed
Licence
Deposit Licence - No Redistribution, No Modifications