The devil is in the details : heterogeneous effects of the German minimum wage on working hours and minijobs

Abstract

Germany introduced a national minimum wage in 2015. While prior studies find limited effects on overall employment, we go into detail and examine its impact on working hours and minijobs. The minimum wage significantly reduces inequality in hourly and monthly wages. While average working hours remain stable, minijobbers experience notable cuts in working hours, which can be explained by the institutional context shaping the effects of the minimum wage. Employment in regular jobs remains unaffected, but minijobs decline, driven by transitions into both regular jobs and non-employment. The latter implies an employment elasticity of -0.16 for minijob employment. Following the first major minimum wage increase in 2022, we reveal a reduction in working hours that is not limited to minijobs, corresponding to an employment volume elasticity of -0.38.