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Effect of Minimum Wages on Human Capital Formation

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  • Jacob Mincer
  • Linda S. Leighton

Abstract

The hypothesis that minimum wages tend to discourage on the job training is largely supported by our empirical analysis. Direct effects on reported job training and corollary effects on wage growth as estimated in microdata of the National Longitudinal Samples (NLS) and Michigan Income Dynamics (MID) are consistently negative and stronger at lower education levels. Apart from a single exception, no effects are observable among the higher wage group whose education exceeds high school. The effects on job turnover are: a decrease in turnover among young NLS whites, but an increase among young NLS blacks and MID whites. Whether these apparently conflicting findings on turnover reflect a distinction between short and long run adjustments in jobs is a question that requires further testing.

Suggested Citation

  • Jacob Mincer & Linda S. Leighton, 1980. "Effect of Minimum Wages on Human Capital Formation," NBER Working Papers 0441, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0441
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    References listed on IDEAS

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    1. Robert Swidinsky, 1980. "Minimum Wages and Teenage Unemployment," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 158-171, February.
    2. Michael L. Wachter & Choongsoo Kim, 1979. "Time Series Changes in Youth Joblessness," NBER Working Papers 0384, National Bureau of Economic Research, Inc.
    3. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
    4. Jacob Mincer & Boyan Jovanovic, 1981. "Labor Mobility and Wages," NBER Chapters, in: Studies in Labor Markets, pages 21-64, National Bureau of Economic Research, Inc.
    5. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
    6. J. Wilson Mixon Jr., 1978. "The Minimum Wage and Voluntary Labor Mobility," ILR Review, Cornell University, ILR School, vol. 32(1), pages 67-73, October.
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    Cited by:

    1. Jeffrey Clemens, 2015. "The Minimum Wage and the Great Recession: Evidence from the Current Population Survey," NBER Working Papers 21830, National Bureau of Economic Research, Inc.
    2. Luis Eduardo Arango & Paula Herrera & Carlos Esteban Posada, 2008. "El salario mínimo: aspectos generales sobre los casos de Colombia y otros países," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 26(56), pages 204-263, June.
    3. Jung-Seung Yang, 2022. "Dynamics of Firm’s Investment in Education and Training: An Agent-based Approach," Computational Economics, Springer;Society for Computational Economics, vol. 60(4), pages 1317-1351, December.
    4. Gorry, Aspen, 2013. "Minimum wages and youth unemployment," European Economic Review, Elsevier, vol. 64(C), pages 57-75.
    5. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    6. Mitkova, Mariya, 2020. "Social Optimum in a Model with Hierarchical Firms and Endogenous Promotion Time," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224589, Verein für Socialpolitik / German Economic Association.
    7. Kim, Ji Hwan & Lee, Jungmin & Lee, Kyungho, 2023. "Minimum wage, social insurance mandate, and working hours," Journal of Public Economics, Elsevier, vol. 225(C).

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