The Regional Effects of a National Minimum Wage

We estimate the spatially differential effects of a nationally uniform minimum wage that was introduced in Germany in 2015. To this end, we use a micro data set covering the universe of employed and unemployed individuals in Germany from 2011 to 2016 and a difference‐in‐differences based identification strategy that controls for heterogeneity in pre‐treatment outcome trends. We find that the policy led to spatial wage convergence, in particular in the left tail of the distribution, without reducing relative employment in low‐wage regions within the first two years.