Running in parallel with the update of the employment analysis, this study focused on firms. It examined the introduction of the minimum wage and the increases of 2017 and 2019 up to and including 2020. The analysis was based on administrative data from the Federal Employment Agency that link the firm and employee levels and permit difference-in-differences and event-study analyses. The decline in total employment was concentrated in medium-sized firms and was almost entirely due to marginal employment. The mechanism is revealing: the decline was driven not by more exits but by markedly fewer new hires into this form of employment. Only with the pandemic in 2020 did exits also rise, and specifically in the sectors most affected. Within firms, wage inequality fell noticeably because wages at the bottom rose disproportionately, accompanied by small spillover effects further up. Up to 2016, no such effects had yet been observed. Between firms, wage inequality remained unchanged. The picture for firm structure was mixed: start-ups of micro firms increased, those of medium-sized firms decreased, while there were no effects on firm closures.
Additional Information
Isphording, I., Caliendo, M., Mahlstedt, R., Pestel, N. & Zimpelmann, C. (2022): Auswirkungen des gesetzlichen Mindestlohns auf individuelle Beschäftigungsbewegungen und betriebliche Lohnstrukturen in den Jahren 2015 bis 2020. Final report, study commissioned by the Minimum Wage Commission, submitted 25 January 2022, published 30 June 2022.
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