The politics of trade globalization

In Germany, due to decreasing collective bargaining coverage and rising wage inequality, a national statutory minimum wage of 8,50€ per hour of work was introduced on the 1st January of 2015. Our goal is to investigate more systematically the causal effects of the new statutory minimum wage on the health and longevity of German firms, focusing especially on small and/or young (newly founded) businesses. Indeed, startups are more vulnerable to wage floors than medium-sized or large firms. Employees often accept lower paychecks in return for ownership rights, experience or the exciting prospect of being part of something new and growing. The introduction of a minimum wage has the potential to upset this delicate balance and harm the long-term prospects of young firms. We would like to address the issue by comparing the evolution of young German firms around the introduction of a national minimum wage in 2015 to both older firms in Germany and similar young firms in countries that did not alter their minimum wage in that timeframe (e.g. Austria). Moreover, we will also examine whether Germany experiences a dip in firm foundation rates as a result of the minimum wage policy.