The Impact of a Large Minimum Wage Hike on the Distributions of Hourly Wages, Monthly Earnings, and Working Hours

Using high-quality employer–employee data from the German Earnings Survey, we evaluate the distributional effects of a large minimum wage hike in Germany in 2022, which raised the statutory minimum wage by more than 22 % within a single year. Our results suggest that the hike increased the hourly wages of directly affected workers and also generated spillover effects well above the new minimum wage threshold. By contrast, the distribution of monthly earnings was much less affected. We show that this is due to reductions in working hours (both regular and overtime) among workers in the middle of the full-time hours distribution.