Evaluating the German "Mini-Job" Reform Using a True Natural Experiment

Marco Caliendo and Katharina Wrohlich

No 569, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: Increasing work incentives for people with low incomes is a common topic in the policy debate across European countries. The "Mini-Job" reform in Germany - introduced on April 1, 2003 - can be seen in line with these policies, exempting labour income below a certain threshold from taxes and employees' social security contributions. 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 German Socio-Economic Panel, that allows us to distinguish groups that are (or are not) affected by the reform. To account for seasonal effects we additionally use a difference-in-differences strategy. The results show that the short-run effects of the reform are limited. We find no significant short-run effects for marginal employment. However, there is evidence that single men who are already employed react immediately and increase secondary job holding.

Keywords: Evaluation; natural experiment; difference-in-differences; marginal employment (search for similar items in EconPapers)
JEL-codes: C25 H31 J68 (search for similar items in EconPapers)
Pages: 21 p.
Date: 2006
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Citations: View citations in EconPapers (1)

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Working Paper: Evaluating the German "Mini-Job" Reform Using a True Natural Experiment (2006)
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