The authors present the first evidence on the consequences of the new statutory minimum wage in Germany, which was implemented on January 1, 2015. Using the IAB Establishment Panel, they identify employment effects from variation in the extent that establishments are affected by the minimum wage. A difference-in-differences estimation reveals an increase in average wages between 3.8% and 6.3% and an employment loss by approximately 1.7% in establishments affected by the minimum wage. These estimates imply a labor demand elasticity with respect to wages ranging between −0.2 and −0.4. The authors also observe a transitory reduction of the working hours in the first year after the introduction and that the employment effect seems mostly driven by a reduction in hires rather than by an increase in layoffs.

German employment relations are characterized by a distinct dual system. First, working conditions and wages are determined by industry-level collective bargaining agreements. Second, on the establishment-level, the works council is responsible for employer-employee negotiations. However, since the mid-1980s, an increasing number of areas of regulation have been transferred from the industry-to the establishment-level using so-called opening clauses. The analysis in this article relies on rich German establishment data and reveals new insights into the institutional machinery of wage bargaining. While the existence of such clauses is related to higher wages, their application results in wage cuts of roughly the same size. The results also suggest that works councils, on average, are able to prevent the negative wage effects of opening clauses.

SummaryEven though the 2008/09 economic crisis had only minor employment effects on the German labor market, it might have affected firms’ further training and apprenticeship training behavior. From a theoretical point of view, the impact of the business cycle on firms’ training behaviour is ambiguous. There are reasons for an increase of training during a downturn (e.g., declining opportunity costs of training, fewer exit options for trained workers) as well as arguments for a decrease of training (e.g., uncertain future benefits of training). The existing empirical evidence on the relationship between training and economic downturns is relatively scarce. In particular, we are not aware of any empirical study investigating the effects of the most recent crisis on firms’ training activities in Germany. Our paper aims to fill this gap by using data from the IAB Establishment Panel, a representative German panel data set with annual information about almost 16,000 establishments. In particular, we analyzed the provision and the intensity of further training and apprenticeship training in firms which were affected by the crisis and in those which were not. Our empirical investigation revealed that the establishments, irrespective of whether or not they were hit by the economic crisis, decreased their further training and apprenticeship training efforts in 2009 compared to 2008. However, establishments directly affected by the great recession tended to reduce their training activities more often than those which were not affected. Furthermore, we found much stronger variations in the development of firms’ further training activities than in the development of their apprenticeship training.

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