Would a Legal Minimum Wage Reduce Poverty? A Micro-simulation Study for Germany

In: Journal of income distribution: an international journal of social economics, S. 131

Abstract

In view of rising poverty rates, the introduction of a legal minimum
wage has become an important policy issue in Germany. We
analyze the distributional effects of a nationwide minimum wage of
7.50e per hour based on a micro-simulation model accounting for interactions
between wages, the tax-benefit system, and net household
incomes. Due to the existing system of means-tested income support,
the minimum wage would be ineffective in reducing poverty in the
overall population, although poverty among singles and families with
children or with a female household head would be slightly reduced.