Unemployment Effects of the German Minimum Wage in an Equilibrium Job Search Model

62 Pages Posted: 31 Jul 2018

See all articles by Maximilian Blömer

Maximilian Blömer

ZEW – Leibniz Centre for European Economic Research; University of Freiburg

Nicole Gürtzgen

ZEW – Leibniz Centre for European Economic Research

Laura Pohlan

ZEW – Leibniz Centre for European Economic Research; Institute for Employment Research (IAB)

Holger Stichnoth

ZEW – Leibniz Centre for European Economic Research

Gerard J. van den Berg

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: 2018

Abstract

We structurally estimate an equilibrium search model using German administrative data and use this for counterfactual analyses of a uniform minimum wage. The model with worker and firm heterogeneity does not restrict the sign of employment effects a priori and allows for different job offer arrival rates for the employed and the unemployed. We find that unemployment is a non-monotonic function of the minimum wage level. Effects differ strongly by labour market segment. Cross-segment variation of the estimated effects is mostly driven by firm productivity levels rather than by search frictions or the opportunity cost of employment.

Keywords: wages, job durations, work, employment, productivity, structural estimation

JEL Classification: J31; J51; J64

Suggested Citation

Blömer, Maximilian and Guertzgen, Nicole and Pohlan, Laura and Stichnoth, Holger and van den Berg, Gerard J., Unemployment Effects of the German Minimum Wage in an Equilibrium Job Search Model (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-032. Available at SSRN: https://ssrn.com/abstract=3223326 or http://dx.doi.org/10.2139/ssrn.3223326

Maximilian Blömer

ZEW – Leibniz Centre for European Economic Research ( email )

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

University of Freiburg ( email )

Fahnenbergplatz
Freiburg, D-79085
Germany

Nicole Guertzgen (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

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

Laura Pohlan

ZEW – Leibniz Centre for European Economic Research ( email )

L 7,1
Mannheim, 68161
Germany

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Holger Stichnoth

ZEW – Leibniz Centre for European Economic Research ( email )

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

Gerard J. Van den Berg

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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