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The effect of education on the minimum wage

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  • Christos Pargianas

Abstract

This research shows for the first time that the level of education has a causal, negative effect on the minimum wage. I use 2SLS, with historical educational data as an instrument for the level of education in 2010, and I find that across the US states a one percentage point greater proportion of college graduates is associated with a real minimum wage that is lower by 1.5%–1.6%. Also, in order to control for state-level omitted variables, I regress the change in the minimum wage on the change in education and I find again a negative, and significantly at the 1% level, effect. Minimum wage is a policy that is chosen by governments according to voters’ preferences. The results of this research imply that when the level of education increases voters prefer a lower minimum wage.

Suggested Citation

  • Christos Pargianas, 2016. "The effect of education on the minimum wage," Applied Economics Letters, Taylor & Francis Journals, vol. 23(11), pages 765-767, July.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:11:p:765-767
    DOI: 10.1080/13504851.2015.1105917
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