Minimum wage as a stress test: financial leeway determines employment effects

Almut Balleer, Britta Gehrke & Ahmet Ali Taskin, 2025, Wirtschaftsdienst - Zeitschrift für Wirtschaftspolitik, Volume 10, pp. 758 - 762, https://www.wirtschaftsdienst.eu/inhalt/jahr/2025/heft/10/beitrag/mindestlohn-als-stresstest-finanzielle-spielraeume-entscheiden-ueber-beschaeftigungseffekte.html.

Abstract

The introduction of Germany’s statutory minimum wage of €8.50 in 2015 led to a redistribution of employment between firms. While overall employment remained stable, companies adapted with varying success depending on their financial resources and exposure to wage increases. Financially constrained firms struggled, which affected their employees more severely. Access to financial funding proved to be a key factor in determining a company’s ability to adjust to higher labor costs, highlighting the importance of financial resilience in mitigating negative employment effects from wage policy changes.