Interconnected gears symbolizing labor migration across a map of Germany, representing economic disparities and worker movement.

Minimum Wage Impact: Who Moves and Why? Unpacking Labor Migration

Lena Kashyap in Business & Economy June 2025 • 4 min read.

"A new study reveals surprising migration patterns following Germany's minimum wage implementation, highlighting the varied responses of native-born and immigrant workers."

The implementation of minimum wage policies is often viewed as a straightforward tool to combat poverty and reduce income inequality. However, the ripple effects of such policies can be complex and far-reaching, influencing not only wages but also labor mobility. Internal migration, the movement of people within a country, is a crucial aspect of labor market dynamics, reflecting how individuals respond to economic opportunities and challenges.

A recent study delves into the impact of Germany's statutory minimum wage introduction in 2015 on internal migration patterns. By analyzing administrative data, the research uncovers intriguing differences in how native-born and immigrant workers responded to the policy, shedding light on the push and pull factors driving their decisions to relocate.

This article explores the key findings of the study, examining the economic forces behind migration, the distinct responses of different worker groups, and the broader implications for regional economies and policy design. Understanding these dynamics is essential for policymakers aiming to create effective and equitable labor market interventions.

The Minimum Wage Migration Effect: Who's Moving?

Interconnected gears symbolizing labor migration across a map of Germany, representing economic disparities and worker movement.

The study's central finding revolves around the differing migration responses of low-skilled workers based on their origin. Following the introduction of the minimum wage in Germany, researchers observed a significant increase—approximately 25%—in the out-migration of low-skilled workers with a migrant background from regions where a high proportion of workers were affected by the wage floor (high-bite districts). This trend intensified over time, suggesting a delayed or accumulating impact.

In contrast, the migration decisions of native-born low-skilled workers were largely unaffected by the minimum wage policy. This divergence raises important questions about the factors influencing labor mobility and the specific challenges faced by immigrant workers in adapting to changing economic landscapes.

Increased Out-Migration: Low-skilled workers with migrant backgrounds were more likely to leave high-bite districts after the minimum wage introduction.
No Significant Impact on Natives: Native-born low-skilled workers did not exhibit a similar migration response.
Growing Trend: The out-migration trend among immigrant workers intensified over time.

Why this difference? The study suggests several potential explanations. Immigrant workers may be more responsive to changes in labor market conditions due to weaker ties to their current location, a greater willingness to pursue opportunities elsewhere, or stronger network effects that facilitate migration. Native-born workers, on the other hand, may have deeper roots in their communities and face greater barriers to relocation.

Beyond Migration: Workplace Reallocation and Long-Term Implications

While the study highlights the impact on migration, it also uncovers shifts in workplace locations. Both native-born and immigrant low-skilled workers showed a tendency to relocate across establishments, moving away from high-bite districts as their primary workplace. This suggests that the minimum wage may have spurred a reallocation of labor, with workers seeking opportunities in regions or establishments that offered better prospects.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2404.1959,

Title: Internal Migration After A Uniform Minimum Wage Introduction

Subject: econ.gn q-fin.ec

Authors: Alexander Moog

Published: 30-04-2024

Everything You Need To Know

How did the introduction of the minimum wage in Germany in 2015 affect internal migration?

The implementation of Germany's minimum wage in 2015 significantly impacted internal migration patterns, particularly among low-skilled workers. The study found that low-skilled workers with migrant backgrounds showed an increased out-migration from high-bite districts, where a large proportion of workers were affected by the minimum wage. Native-born low-skilled workers did not exhibit a similar migration response. This divergence highlights how the minimum wage policy triggered different reactions based on workers' origins, influencing their decisions to relocate within Germany.

What are "high-bite districts" and why are they important in this context?

High-bite districts are regions in Germany where a significant portion of the workforce was directly affected by the introduction of the minimum wage. These districts are important because they served as the focal point for observing the impact of the policy on labor migration. The study specifically analyzed the migration patterns of workers from these areas to understand the consequences of the minimum wage on labor mobility. The term "high-bite" refers to the percentage of workers whose wages were raised due to the minimum wage implementation, with a high percentage implying a "high-bite district".

Why did low-skilled workers with migrant backgrounds react differently to the minimum wage compared to native-born workers?

The study suggests that low-skilled workers with migrant backgrounds were more likely to relocate from high-bite districts compared to native-born workers because of several factors. Immigrant workers might have weaker ties to their current location, making them more open to seeking opportunities elsewhere. They may also be more responsive to changes in labor market conditions. Additionally, they may benefit from stronger network effects that facilitate migration. Native-born workers, on the other hand, may have deeper roots in their communities and face greater barriers to relocating, such as established social networks, homeownership, and family obligations.

Besides migration, what other labor market effects did the minimum wage implementation in Germany have on workers?

Besides impacting migration, the minimum wage introduction in Germany also led to changes in workplace locations. Both native-born and immigrant low-skilled workers showed a tendency to relocate across establishments, moving away from high-bite districts as their primary workplace. This suggests a reallocation of labor as workers sought better prospects in regions or establishments that offered improved employment conditions. This reveals the broader impact of the minimum wage on the labor market beyond just wages, influencing workplace dynamics and the distribution of labor across different areas.

What are the broader implications of these findings for policymakers aiming to create effective labor market interventions?

The study's findings highlight the complex and multifaceted effects of minimum wage policies, emphasizing that their impact extends beyond wages and affects labor mobility and workplace dynamics. Policymakers can utilize this information by considering the diverse responses of different worker groups when implementing labor market interventions. Understanding how factors such as worker origin influence migration patterns is crucial for designing policies that mitigate potential negative consequences, such as the displacement of low-skilled immigrant workers from certain regions. The study underscores the importance of considering the full range of effects when evaluating the effectiveness and equity of labor market interventions.