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Mind the gap: effects of the national minimum wage on the gender wage gap of full-time workers in Germany

Year: 2025

Type: article

Abstract: Since 2015, the national minimum wage aims to benefit primarily low-wage workers in Germany. I examine how the minimum wage influences gender wage gaps of full-time workers within the lower half of the wage distribution on a regional level. Using administrative data, distinct regional differences in the extent of gender wage gaps and responses to the minimum wage become clear. Overall, wage gaps between men and women at the 10th percentile decrease by 2.46 and 6.34 percentage points in the West and East of Germany after 2015. Applying counterfactual wage distributions, I show that introducing the minimum wage explains decreases in gender wage gaps by 60% to 95%. Group-specific analyses demonstrate various responses based on age, educational level and occupational activity. Counterfactual aggregate Oaxaca-Blinder decompositions indicate that discriminatory remuneration structures decrease in the West of Germany after introducing the minimum wage.

Source: The Journal of Economic Inequality

DOI: 10.1007/s10888-025-09669-6

Author: Ramona Schmid

Institutions: Ifo Institute for Economic Research, Ludwig-Maximilians-Universität München

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Gender equality, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,290