Employment Effects of Introducing a Minimum Wage: The Case of Germany
Oliver Holtemöller, Felix Pohle
Economic Modelling,
No. 7,
2020
Abstract
Income inequality has been a major concern of economic policy makers for several years. Can minimum wages help to mitigate inequality? In 2015, the German government introduced a nationwide statutory minimum wage to reduce income inequality by improving the labour income of low-wage employees. However, the employment effects of wage increases depend on time and region specific conditions and, hence, they cannot be known in advance. Because negative employment effects may offset the income gains for low-wage employees, it is important to evaluate minimum-wage policies empirically. We estimate the employment effects of the German minimum-wage introduction using panel regressions on the state-industry-level. We find a robust negative effect of the minimum wage on marginal and a robust positive effect on regular employment. In terms of the number of jobs, our results imply a negative overall effect. Hence, low-wage employees who are still employed are better off at the expense of those who have lost their jobs due to the minimum wage.
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Capital Account Liberalisation Does Worsen Income Inequality
Xiang Li, Dan Su
IWH Discussion Papers,
No. 7,
2020
Abstract
This study examines the relationship between capital account liberalisation and income inequality. Adopting a novel identification strategy, namely a difference-in-difference estimation combined with propensity score matching between the liberalised and closed countries, we provide robust evidence that opening the capital account is associated with an adverse impact on income inequality in developing countries. The main findings are threefold. First, fully liberalising the capital account is associated with a small rise of 0.07-0.30 standard deviations in the Gini coefficient in the short-run and a rise as large as 0.32-0.62 standard deviations in the ten years after liberalisation, on average. Second, widening income inequality is the outcome of the growing income share of the rich at the cost of the poor. The long-term effect of capital account liberalisation includes a reduction in the income share of the poorest half by 2.66-3.79 percentage points and an increase in the income share of the richest 10% by 5.19-8.76 percentage points. Third, the directions and categories of capital account liberalisation matter. Inward capital account liberalisation is more detrimental to income equality than outward capital account liberalisation, and free access to the international equity market exacerbates income inequality the most, while foreign direct investment has an insignificant impact on inequality.
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Foreign Bank Ownership and Income Inequality: Empirical Evidence
Manthos D. Delis, Iftekhar Hasan, Nikolaos Mylonidis
Applied Economics,
No. 11,
2020
Abstract
Using country-level panel data over 1995–2013 on within-country income inequality and foreign bank presence, this paper establishes a positive relation between the two, running from higher foreign bank presence to income inequality. Given that foreign bank participation increased by 62% over the period 1995 to 2013, our baseline results imply a 5.8% increase in the Gini coefficient on average over this period, ceteris paribus. These results are robust to the inclusion of country and year fixed effects and to the use of restrictions on foreign bank entry in the host countries as an instrumental variable. We show that this positive effect is channelled through the lack of greenfield entry and the associated lower levels of competition.
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Innovation and Top Income Inequality
Philippe Aghion, Ufuk Akcigit, Antonin Bergeaud, Richard Blundell, David Hemous
The Review of Economic Studies,
No. 1,
2019
Abstract
In this article, we use cross-state panel and cross-U.S. commuting-zone data to look at the relationship between innovation, top income inequality and social mobility. We find positive correlations between measures of innovation and top income inequality. We also show that the correlations between innovation and broad measures of inequality are not significant. Next, using instrumental variable analysis, we argue that these correlations at least partly reflect a causality from innovation to top income shares. Finally, we show that innovation, particularly by new entrants, is positively associated with social mobility, but less so in local areas with more intense lobbying activities.
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Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy
Oded Stark, Walter Hyll, Y. Wang
Economica,
No. 313,
2012
Abstract
We consider a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups. Skill levels are viewed as occupational groups. Moving up the skill ladder by acquiring additional human capital, in itself rewarding, leads to a shift in the individual’s inclination to compare himself with a different, and on average better-paid, comparison group, in itself penalizing. We shed new light on the dynamics of human capital formation, and suggest novel policy interventions to encourage human capital formation in the aggregate and reduce inter-group income inequality.
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Poverty in EU Countries
Herbert S. Buscher, Ingmar Kumpmann, Li Huan
Wirtschaft im Wandel,
No. 6,
2010
Abstract
The contribution provides an overview of several poverty measures in European countries. These measures are recommended by the so-called Laeken criteria and include, among others, the level of poverty income, the Gini coefficient as a measure of inequality of the income distribution as well as the 90/10- and the 80/20-ratio of the income distribution to shed light on the relation of the income shares in the extreme tails of the distribution. Compared over the years 2000 and 2008, the results indicate an increase in poverty in Europe over time, with Germany being located in the middle of the selected countries. Relative poverty is most severe in the new EU member states such as Romania, Bulgaria, and Latvia.
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Do differences in rental rates compensate for unequal living conditions?
Dominik Weiß
M. T. W. Rosenfeld, D. Weiß (Hrsg.), Gleichwertigkeit der Lebensverhältnisse zwischen Politik und Marktmechanismus. Empirische Befunde aus den Ländern Sachsen. Sachsen-Anhalt und Thüringen,
2010
Abstract
Equality of living conditions is a politically institutionalized goal in Germany. Due geographical inequality in income levels and in the availability of services in the area of “subsistence support”, politicians are claiming the necessity of intervention to overcome regional disparities. However, actual implementation of the goal of equality seems to be increasingly difficult in view of current migration tendencies and demographic developments. This article starts with the theory of geographical balances and analyzes the extent to which rental rates in the market process reflect regional differences in income and amenities.
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Prekäre Einkommenslagen ind Deutschland - ein Ost-West-Vergleich 1996-2002
Herbert S. Buscher, Juliane Parys
Allgemeines Statistisches Archiv,
No. 4,
2006
Abstract
The paper investigates the distribution of equivalence-weighted net household income for West and East Germany, covering the period from 1996 to 2002. The data set used is the annual cross section data set “Mikrozensus”. The main issues of the paper are twofold. First, we analyze standard measures of income distributions as well as measures of inequality. Second, we set up a Logit model to explain relative poorness in East and West Germany using Mikrozensus data to capture household characteristics. The main focus in this section deals with the question how different types of forms of living and the number of children will affect the risk of falling into precarious income situations. The results show that the risk of getting poor is higher for families with children as well as for single persons with children.
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Prekäre Einkommenslagen in Deutschland: Ein Ost-West-Vergleich 1996 bis 2002
Herbert S. Buscher, Juliane Parys
IWH Discussion Papers,
No. 2,
2006
Abstract
The paper investigates the distribution of equivalence-weighted net household income for West and East Germany, covering the period from 1996 to 2002. The data set used is the annual cross section data set “Mikrozensus”. The main issues of the paper are twofold. First, we analyze standard measures of income distributions as well as measures of inequality. Second, we set up a Logit model to explain relative poorness in East and West Germany using Mikrozensus data to capture household characteristics. The main focus in this section deals with the question how different types of forms of living and the number of children will affect the risk of falling into precarious income situations. The results show that the risk of getting poor is higher for families with children as well as for single persons with children.
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Causes of the growing wage-income gap in the USA: Current aspects in research and the political discussion
Peter Franz
IWH Discussion Papers,
No. 65,
1997
Abstract
Data sets from OECD countries and especially the US indicate growing inequalities in income and thus stimulate research with respect to this topic. In this paper the basic arguments and results of several studies with an economic and a sociological background are compared and discussed. It concentrates a) on the theory of Kuznets and its modifications, b) on the “technology vs. trade” controversy, and c) on panel studies which allow an analysis of income mobility. Finally the research questions are dealt with if Germany will show similar degrees of income inequality as in the US in the years to come and if the two countries differ in their political tolerance towards income inequality.
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