How did the minimum wage implementation impact mothers’ and childless women’s employment? Evidence for West Germany.

Women, and especially mothers, are overrepresented in part-time and low-wage jobs in Germany. Yet, little is known about how minimum wage floors affect the employment of childless women and mothers. We use a difference-in-differences design based on county-level variation in average wage levels to assess how the 2015 minimum wage reform in Germany affected the employment of 1) mothers and childless women, 2) mothers of pre-school and school-aged children, and 3) mothers in counties with low and high childcare availability. We contrast theoretical predictions from neoclassical economics and theories of gender norms to derive hypotheses. Using panel data from the German Microcensus (2014-2015) for West Germany, we estimate the impact of the minimum wage at the county level (N=324 counties) on women’s transition probabilities between inactivity, marginal, part-time, and full-time employment. Findings support that inactive mothers were more likely to take up marginal or part-time work after the reform, whereas already employed mothers tended to reduce their working hours, thus consolidating maternal marginal and part-time work. Childless women show little response to the reform. Overall, raising wage floors may reduce gaps in employment participation between mothers and childless women, but is unlikely to reduce gaps in employment intensity.