Minimum wage and disability-related differentials in earnings in Germany

We investigate whether the German national minimum wage implemented on 1 January 2015 contributed to reducing disability-related wage gap (DG). Using the distribution regression, we compare DG at different points of the wage distribution between 2014 and 2015. Our result suggests that DG is widened in 2015, especially in middle and upper points of the distribution due to a larger wage growth among workers without disabilities. By exploiting counterfactual distributions, we find that the wider gap is mostly attributed to discriminatory factors that are not explained by heterogeneity in workers' job or personal characteristics. After restricting the disabled sample to those who possess severe disabilities, on the other hand, we observe up to 10 ppt reduction in the unexplained DG among the workers earning around the national MW, 8.5 euro per hour. A similar change is reported with respect to earnings of female workers with disabilities. These findings are presumably due to larger bites of the MW among these sub-groups of the disabled.