Authors	Caliendo, M. and Wrohlich, K.
Year	2010
Reference	Applied Economics, 42(19), 2475–2489.
Keywords	Evaluation, Natural Experiment, Difference-in-Differences, Marginal Employment.
JEL-Classification	C25, H31, J68
Presentations	7th International German SOEP User Conference in Berlin (2006), 61st European Meeting of the Econometric Society (ESEM) in Vienna (2006), Annual EALE Conference in Prague (2006).
Download	Revised version from July 2006: PDF IZA Discussion Paper from March 2006: PDF
Abstract	Increasing work incentives for people with low incomes is a common topic in the policy debate across European countries. The 'Mini-Job' reform in Germany - introduced on April 1, 2003 - can be seen in line with these policies, exempting labour income below a certain threshold from taxes and employees' social security contributions. 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 German Socio-Economic Panel, that allows us to distinguish groups that are (or are not) affected by the reform. To account for seasonal effects we additionally use a difference-in-differences strategy. The results show that the short-run effects of the reform are limited. We find no significant short-run effects for marginal employment. However, there is evidence that single men who are already employed react immediately and increase secondary job holding.