The Effect Of The German Minimum Wage on Immigrants

This paper investigates the effect of the German minimum wage on immi-grants. The effect of the minimum wage on employment has been discussed in papers (articles by Caliendo et al. (2018) & Bruttel, Baumann, and D¨utsch (2018)), however, the focus was on workers in Germany in general. The aim of this paper is discuss the effect of the minimum wage on employment and working choice of immigrant workers. Thus, the research question is How did the introduction of the minimum wage in Germany affect immigrant workers in the short run? Data from the German Socio-Economic Panel is analysed using a Difference-in-Difference framework, relying on the variation between states in how strongly the minimum wage affected the workers (measured by the proportion of workers earning lower than the minimum wage in the year before its introduction). Based on that, the conclusion is that the minimum wage did not reduce immigrant employment but increased unemployment, and it lead them to reduce their working hours. Immigrants were also found to not migrate from states where the minimum wage impacted the most to the states where it impacted the most.