TY  - RPRT
        AU  - Goerke, Laszlo
AU  - Pannenberg, Markus
        TI  - Minimum Wage Non-compliance: The Role of Co-determination
        PY  - 2023/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 16621
        UR  - https://www.iza.org/publications/dp16621
        AB  - We analyse in what way co-determination affects non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no impact on the difference between the minimum wage and the amount, which was actually paid. Therefore, co-determination helps to secure the payment of minimum wages.
        KW  - co-determination
KW  - labour law
KW  - minimum wages
KW  - Socio-economic Panel (SOEP)
KW  - non-compliance
KW  - works councils
        ER  -