The minimum wage is often considered a social policy instrument that can help reduce both poverty and welfare receipt. The introduction of the statutory minimum wage in Germany in 2015 provides an interesting case study to analyse not only the potential but also the limitations of minimum wages as an instrument to achieve socially desirable goals such as reduced welfare receipt or poverty. Based on the results of simulation models, descriptive analyses and causal effects studies of the short-term effects, we argue that minimum wages are a rather badly targeted measure when attempting to reduce poverty and welfare receipt.

In many countries, population ageing is challenging the viability of the welfare state and generating higher demands for long-term care. At the same time, increasing participation in the labour force is essential to ensuring the sustainability of the welfare state. To address the latter issue, affected countries have adopted measures to increase employment; e.g. welfare recipients in Germany are required to be available for any type of legal work. However, 7 per cent of welfare benefit recipients in Germany provide long-term care for relatives or friends, and this care-giving may interfere with their job search efforts and decrease their employment opportunities. Our paper provides evidence of the relationship between the care responsibilities and employment chances of welfare recipients in Germany. Our analyses are based on survey data obtained from the panel study ‘Labour Market and Social Security’ and on panel regression methods. The results reveal a negative relationship between intensive care-giving (ten or more hours per week) and employment for male and female welfare recipients. However, employment prospects recover when care duties end and are subsequently no longer lower for carers than for non-carers.