Abstract
This paper estimates the employment effects of industry-specific, collectively-bargained minimum wages in Germany for two occupations associated with the construction sector. I propose a truly exogenous control group in contrast to the control group design used in the literature. Further, a difference-in-differences estimator is presented as a robustness test for occupation-specific and/or industry-specific, time varying, unobserved heterogeneity. I do not find a significantly negative employment effect, even though the minimum wage is binding in (East) Germany. This result can be explained by substitution effects, noncompliance and models of monopsonic competition.
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