The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector

48 Pages Posted: 15 Dec 2012

See all articles by Bodo Aretz

Bodo Aretz

ZEW – Leibniz Centre for European Economic Research

Melanie Arntz

ZEW – Leibniz Centre for European Economic Research

Terry Gregory

IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Abstract

This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.

Keywords: minimum wage, Germany, capital-labour substitution, labour-labour substitution, scale effect

JEL Classification: J38, J21, J23

Suggested Citation

Aretz, Bodo and Arntz, Melanie and Gregory, Terry, The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector. IZA Discussion Paper No. 7047, Available at SSRN: https://ssrn.com/abstract=2189785

Bodo Aretz (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Melanie Arntz

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Terry Gregory

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://https://sites.google.com/view/terrygregory

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
Mannheim, 68161
Germany

HOME PAGE: http://https://sites.google.com/view/terrygregory

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