Within the series of studies for the Minimum Wage Commission, this one takes a distinct perspective: the household rather than the firm or the employment relationship. This is more demanding methodologically, because the effect of a minimum wage at household level results from the wages of all working members and not from a single hourly wage. The study examined the introduction in 2015 and the increase in 2017 up to and including 2018, based on the German Socio-Economic Panel for income and savings and on the Income and Expenditure Survey for consumption. Households were considered affected if, in 2014, at least one eligible member earned less than 8.50 euros per hour. Among these households, net income rose by around 92 euros, or 4.3 per cent, between 2014 and 2016, and no additional effect of the 2017 increase could be detected. The minimum wage had no overall effect on the probability of saving. The accompanying consumption analysis showed that low-income households spend additional funds disproportionately on basic needs such as food, housing, and energy.
Additional Information
Schröder, C., Göbler, K., Grabka, M., Kolb, C., Shupe, C., Caliendo, M., Tübbicke, S. & Priem, M. (2020): Auswirkungen des gesetzlichen Mindestlohns auf Haushaltseinkommen, Konsum- und Sparverhalten. Final report, study commissioned by the Minimum Wage Commission, submitted 6 January 2020, published 30 June 2020.
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