Abstract
We analyze the short-run impact of the introduction of the new statutory minimum wage in Germany on further training at the workplace level. Applying difference-in-difference methods to data from the IAB Establishment Panel, we do not find a reduction in the training incidence but a slight reduction in the intensity of training at treated establishments. Effect heterogeneities reveal that the negative impact is mostly driven by employer-financed training. On the worker level, we observe a reduction of training for medium- and high-skilled employees but no significant effects on the training of low-skilled employees.
Highlights
In the literature on minimum wages, there has been a long-lasting and still ongoing discussion on the effects of minimum wages on employment
Human capital theory predicts that binding minimum wages prohibit wage cuts that are used by employers to finance training
If training costs are not offset by an increase in productivity, firms have to cut training costs
Summary
In the literature on minimum wages, there has been a long-lasting and still ongoing discussion on the effects of minimum wages on employment. In case of non-competitive labor markets, a counteractive increase in training investments could be used to restore productivitydependent rents Following these arguments, it seems sensible to complement empirical studies of employment effects (e.g., Bossler and Gerner 2016) with evidence on minimum wage-induced impacts on training at the workplace level. As minimum wages are theoretically associated with an employment reduction, firms cannot fully appropriate the gains in form of a higher productivity leading to a reduced incentive for training provision. This is especially the case for low-qualified workers whose employment is most endangered by minimum wages. All these theoretical considerations allow us to derive expectations in the form of empirical hypotheses. (1) The human capital theory predicts minimum wages to reduce training. (2) In some circumstances, this pessimistic prediction can be relaxed when (a) frictions allow for productivity-dependent rents in less competitive labor markets (Acemoglu and Pischke 2003) or (b) low-skilled employees have a labor demand-induced incentive to invest in training (Cahuc and Michel 1996). (3) The results by Lechthaler and Snower (2008) predict a decrease of training for low-skilled workers but a modest increase of training for medium- and high-skilled employees
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