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  • Essay / The Effects of Minimum Wages on Economies: An Analysis...

    So far, this article has examined the effects of minimum wages globally. Many disagreements remain regarding the effects of the minimum wage. In order to draw concise conclusions about the effects of the minimum wage, this article will examine German minimum wage legislation. Germany has the largest economy and the fourth lowest unemployment rate in the eurozone. Germany is also one of five countries that currently have higher employment rates than before the global financial crisis. Some economists believe this is due to Germany's ability to keep labor costs to a minimum. In order to explore this issue further, it is worth examining how Germany has already dealt with minimum wage legislation. It should be noted that Germany does not have a national minimum wage, but rather many regional minimum wages depending on job requirements. Wages in Germany include many different minimums determined at the subnational level, so minimum wages may differ between sectors or regions. Joachim Wagner, a leading researcher in German macroeconomics, analyzed whether or not there was a wage curve, a negative relationship between wage level and employment rate, in German society from 1979 to 1990. Wagner limited the data to only full-time working German men. , women were entering the workforce at this time and were therefore excluded as a minority group, as was the measurement of gross monthly income. Wagner's results showed that there was no significant evidence of a wage curve in Germany, but that there was a stable wage in Germany regardless of unemployment figures. Wagner's null hypothesis was never rejected at the five percent level, which could indicate that there is a...... middle of article...... January 201424. Smith , A. (1863), An iquiry into the nature and causes of the wealth of nations, JR M'Culloc, available at http://books.google.de/books?hl=en&lr=&id=pnItAAAAYAAJ&oi=fnd&pg=PR1&dq =adam+smith+wealth+of+nations&ots= GeSevWKCRb&sig=2uw9lvE3JydIniVZoXCYiGpY0Zk#v=onepage&q=adam%20smith%20wealth%20of%20nations&f=false, accessed January 17, 2014.25. Stigler, G. (1946), The Economics of minimum Wlaw Law, The American Economic Review, Vol 36, No 3, pp358-365, available at http://www.jstor.org/stable/1801842, accessed January 5 . 2014.26. Wage Indicator (2013), Minimum Wages in Germany 2013, http://www.wageindicator.org/main/salary/minimum-wage/germany, accessed January 5, 2014.27. Wagner, J. (1993), German Wage Curves 1979-1990, available at http://www.sciencedirect.com/science/article/pii/016517659300367W, accessed January 10 2014.