Program > Papers by author > Stichnoth Holger

Estimating a Structural Equilibrium Job Search Model to Evaluate the Introduction of a Uniform Minimum Wage in Germany
Maximilian Joseph Blömer  1@  , Nicole Guertzgen  2, 3@  , Laura Pohlan  1, 4@  , Holger Stichnoth  1@  , Gerard Van Den Berg  4@  
1 : Centre for European Economic Research  (ZEW)  -  Website
Centre for European Economic Research L 7, 1 68161 Mannheim -  Germany
2 : IAB Nuremberg  (IAB)
3 : Universität Regensburg - UR (GERMANY)
4 : University of Mannheim

In this study, we estimate an econometric structural equilibrium search model to ex-ante simulate the introduction of a uniform minimum wage in the German labour market. We use the model to gain a better understanding about the magnitude of search frictions and, thus, the extent of employers market power in the German low-wage sector. To accommodate a wide range of employment responses, we estimate the model by Bontemps et al. (1999), which allows for negative, zero or positive employment effects. We take the model to large-scale administrative German data, and validate our estimations by comparing our predictions to the results from quasi-experimental studies on the introduction and changes in sectoral minimum wages. We then use the model to conduct a variety of policy simulations, including the systematic variation of general minimum wages over a large range of values.



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