Evaluating the German 'Mini-Job' reform using a natural experiment

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Abstract:

Increasing work incentives for people with low income is a common topic in the policy debate across European countries. The 'Mini-Job' reform in Germany had a similar motivation. We carry out an ex-post evaluation to identify the short-run effects of this reform. Our identification strategy uses an exogenous variation in the interview months in the Socio-Economic Panel Study (SOEP), which allows us to distinguish groups that are affected by the reform from those who are not. To account for seasonal effects we additionally use a Difference-In-Differences (DID) strategy. Descriptives show that there is a post-reform increase in the number of mini-jobs. However, we show that this increase cannot be causally related to the reform, since the short-run effects are very limited. Only single men seem to react immediately and increase secondary job holding.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701858125

Affiliations: 1: Institute for the Study of Labor (IZA), PO Box 7240, 53072 Bonn, Germany 2: German Institute for Economic Research (DIW) in Berlin and IZA, Bonn, Germany

Publication date: August 1, 2010

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