Wage Inequality in Germany after the Minimum Wage Introduction

Abstract

Monthly wage inequality in Germany continued to increase in the early 2000s, which is mainly explained by a rising part-time employ- ment share. After 2010, inequality returned to the level of 2000. About half of the recent decrease is due to the introduction of the national minimum wage in 2015. While employment effects of the minimum wage are negligible, we find strong wage increases among the existing workforce. The minimum wage lowered wage inequal- ity within eastern and western Germany but also led to a conver-gence of the east-west wage differential. The increased labor incomes were not offset by decreasing social benefits.