Internal migration after a uniform minimum wage introduction

TL;DR

This study examines how Germany's 2015 minimum wage policy affected internal migration, revealing increased out-migration among low-skilled migrant workers and highlighting the policy's influence on labor mobility patterns.

Contribution

It provides the first empirical evidence of the minimum wage's impact on internal migration using a large administrative dataset and a novel fixed effects Poisson difference-in-differences approach.

Findings

Low-skilled migrant workers' out-migration increased by 25%.

Native-born low-skilled workers' migration remained unaffected.

Unemployed migrants also showed increased out-migration from high-bite districts.

Abstract

Internal migration is an essential aspect to study labor mobility. I exploit the German statutory minimum wage introduction in 2015 to estimate its push and pull effects on internal migration using a 2% sample of administrative data. In a conditional fixed effects Poisson difference-in-differences framework with a continuous treatment, I find that the minimum wage introduction leads to an increase in the out-migration of low-skilled workers with migrant background by 25% with an increasing tendency over time from districts where a high share of workers are subject to the minimum wage (high-bite districts). In contrast the migration decision of native-born low-skilled workers is not affected by the policy. However, both native-born low-skilled workers and those with a migrant background do relocate across establishments, leaving high-bite districts as their workplace. In addition, I find an increase for unemployed individuals with a migrant background in out-migrating from high-bite districts. These results emphasize the importance of considering the effects on geographical labor mobility when implementing and analyzing policies that affect the determinants of internal migration.