Evaluating the German "Mini-Job" reform using a natural experiment

Abstract

Increasing work incentives for people with low income is a common topic in the policy debate across European countries. The "Mini-Job" reform in Germany had a similar motivation. We carry out an ex-post evaluation to identify the short-run effects of this reform. Our identification strategy uses an exogenous variation in the interview months in the SOEP, that allows us to distinguish groups that are affected by the reform from those who are not. To account for seasonal effects we additionally use a difference-in-differences strategy. Descriptives show that there is a post-reform increase in the number of Mini-jobs. However, we show that this increase can not be 'causally' related to the reform, since the short-run effects are very limited only. Only single men seem to react immediately and increase secondary job holding.