Understanding Midijobs - Renewal Proposal

• Applicant: Professorin Regina Therese Riphahn, Ph.D.
• Subject Area: Economic Policy, Applied Economics ; Statistics and Econometrics
• Term: from 2019 to 2025
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 421989959

• Final Report Year: 2025

Final Report Abstract

The share of German workers receiving wage subsidies for small jobs is high and increasing: While around 20% of the labor force was employed in Mini- and Midijobs in 2017, by the end of 2023, this had risen to 12.8 million individuals or 28% of the labor force. Minijobs are employment relationships with a monthly earnings cap (2025: 556 Euros). Employees are exempt from taxes and contributions. Midijobs are employment relationships with monthly earnings between the Minijob earnings cap and (currently) 2000 Euros. Midijob employees benefit from subsidized social insurance contributions. Earnings above the Minijob earnings cap are subject to income tax, and earnings above the Midijob earnings cap are fully subject to social insurance contributions. Despite their prevalence, there are almost no studies on Midijobs. The topic is politically relevant, as the federal government has continuously expanded Midijob subsidies. At the same time, evidence of the effectiveness of Midijob subsidies has been lacking. International literature deals extensively with wage subsidies. The German case is interesting as the subsidies apply universally and not only to certain individuals, companies, sectors, or regions. The reforms of recent years allow for the identification of causal effects. Subproject 1 describes the use of Midijobs, particularly access to and exit from Midijobs. We examine the labor market states from which individuals enter Midijobs, analyzing Midijob duration and exit behavior. The study is published in the Journal of Economics and Statistics. Subproject 2 investigates whether Midijobs have achieved their purpose: Midijobs were developed because of a disincentive arising from Minijobs. At the earnings cap of Minijobs, there is a "part-time wall" or "Minijob trap": a notch (and kink) in the net wage distribution renders gross earnings increases unattractive. Midijobs were introduced to mitigate this barrier. We apply causal analysis methods (difference-in-differences and regression discontinuity in time) to determine whether the introduction of Midijobs affected the likelihood of earnings increases beyond the Minijob earnings cap. It appears that for most Minijobbers Midijobs do not significantly contribute to the increase in transition probabilities from Minijobs to regular employment. The study is forthcoming in International Tax and Public Finance. Subproject 3 additionally covers the 2013 and 2019 Midijob reforms. These reforms expanded the monthly earnings limits for Midijobs from originally 400-800 to initially 450-850 Euros (since 2013) and then to 450-1,300 Euros (from 2019). We evaluate the distribution of low-income earners across earnings groups but find no responses in bunching patterns to Midijob reforms. The likelihood of transitioning from a Minijob to regular employment also hardly responds to reforms. Midijobs do not seem to contribute to eliminating the Minijob trap. The study is published in the Journal for Labour Market Research.

Publications

• Employment effects of payroll tax subsidies. Small Business Economics, 57(3), 1201-1219.
  Collischon, Matthias; Cygan-Rehm, Kamila & Riphahn, Regina T.
  
• Minijobs in Kleinbetrieben: Sozialversicherungspflichtige Beschäftigung wird verdrängt, IAB Forum 20.10.2021, pp.1-7
  Collischon, Matthias, Kamila Cygan-Rehm & Regina T. Riphahn
  
• The Untold Story of Midijobs. Jahrbücher für Nationalökonomie und Statistik, 242(3), 309-341.
  Herget, Anna & Riphahn, Regina T.
  
• Minijobs as stepping stones to regular employment: overall trends and the role of Midijob reforms. Journal for Labour Market Research, 58(1).
  Collischon, Matthias; Herget, Anna & Riphahn, Regina T.
  
• Sollten Minijobs in Deutschland abgeschafft werden? Pro & Contra, Wirtschaftswoche 44/2024, 25.10.2024, S. 38
  Riphahn, Regina T.
  
• Subventionen für „kleine Jobs“:. AStA Wirtschafts- und Sozialstatistisches Archiv, 18(1), 5-14.
  Riphahn, Regina T.
  
• Long-Run Career Outcomes of Multiple Job Holding. ILR Review, 79(1), 114-141.
  Muffert, Johanna & Riphahn, Regina T.
  
• Phasing out payroll tax subsidies. International Tax and Public Finance, 32(5), 1501-1531.
  Herget, Anna & Riphahn, Regina T.
  
• Subsidized small jobs and maternal labor market outcomes in the long run. Socio-Economic Review, 23(3), 1193-1223.
  Collischon, Matthias; Cygan-Rehm, Kamila & Riphahn, Regina T.