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It is real: On the relation between minimum wages and labor market outcomes for teenagers

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  • Micheli, Martin

Abstract

This paper reexamines the relation between minimum wages and labor market outcomes for teenagers in the US. Economic theory suggests that real minimum wages drive labor market outcomes. Instead of the commonly used nominal minimum wages, we therefore use real minimum wages to examine this relation. Increasing real minimum wages are associated with a reduction in teen employment and working hours. The correlation with real hourly wages of teenagers is positive. These results are robust to the choice of the control group, whether we compare labor market outcomes in the respective state to all other states or to spatially close states, only. This strongly suggests that interpreting nominal minimum wage changes as minimum wage shocks is not a valid identification strategy.

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  • Micheli, Martin, 2019. "It is real: On the relation between minimum wages and labor market outcomes for teenagers," Ruhr Economic Papers 829, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:829
    DOI: 10.4419/86788962
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    1. Micheli, Martin, 2019. "Labor market effects of minimum wage shocks," Ruhr Economic Papers 830, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    minimum wage; teen employment; teen working hours; teen wages; state panel; US;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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