IDEAS home Printed from https://ideas.repec.org/p/aim/wpaimx/1850.html
   My bibliography  Save this paper

Federal Minimum Wage Hikes Do Reduce Teenage Employment

Author

Abstract

In 2002 we published a paper in which we used state space time series methods to analyse the teenage employment-federal minimum wage relationship in the US (Bazen and Marimoutou, 2002). The study used quarterly data for the 46 year period running from 1954 to 1999. We detected a small, negative but statistically significant effect of the federal minimum wage on teenage employment, at a time when some studies were casting doubt on the existence of such an effect. In this note we re-estimate the original model with a further 16 years of data (up to 2015). We find that the model satisfactorily tracks the path of the teenage employment-population ratio over this 60 year period, and yields a consistently negative and statistically significant effect of minimum wages on teenage employment. The conclusion reached is the same as in the original paper, and the elasticity estimates very similar: federal minimum wage hikes lead to a reduction in teenage employment with a short run elasticity of around -0.13. The estimated long run elasticity of between -0.37 and -0.47 is less stable, but is nevertheless negative and statistically significant.

Suggested Citation

  • Stephen Bazen & Vêlayoudom Marimoutou, 2018. "Federal Minimum Wage Hikes Do Reduce Teenage Employment," AMSE Working Papers 1850, Aix-Marseille School of Economics, France.
  • Handle: RePEc:aim:wpaimx:1850
    as

    Download full text from publisher

    File URL: https://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2018_-_nr_50.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
    2. Harvey, Andrew & Scott, Andrew, 1994. "Seasonality in Dynamic Regression Models," Economic Journal, Royal Economic Society, vol. 104(427), pages 1324-1345, November.
    3. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," ILR Review, Cornell University, ILR School, vol. 46(1), pages 22-37, October.
    4. David Neumark, 2018. "Employment effects of minimum wages," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-6, December.
    5. Charles Brown & Curtis Gilroy & Andrew Kohen, 1983. "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 3-31.
    6. David Neumark & William Wascher, 1992. "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws," ILR Review, Cornell University, ILR School, vol. 46(1), pages 55-81, October.
    7. repec:iza:izawol:journl:y:2014:p:6 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Neumark & Peter Shirley, 2021. "Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?," NBER Working Papers 28388, National Bureau of Economic Research, Inc.
    2. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2101-2163 is not listed on IDEAS
    2. Brewer, Mike & Crossley, Thomas F. & Zilio, Federico, 2019. "What Do We Really Know about the Employment Effects of the UK's National Minimum Wage?," IZA Discussion Papers 12369, Institute of Labor Economics (IZA).
    3. Marianne E. Page & Joanne Spetz & Jane Millar, 2005. "Does the minimum wage affect welfare caseloads?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 273-295.
    4. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    5. Gilbert Cette & Philippe Cuneo & Didier Eyssartier & Jérôme Gautié, 1996. "Coût du travail et emploi des jeunes," Revue de l'OFCE, Programme National Persée, vol. 56(1), pages 45-72.
    6. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09i8hjg0kpi is not listed on IDEAS
    7. Zsófia L. Bárány, 2016. "The Minimum Wage and Inequality: The Effects of Education and Technology," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 237-274.
    8. José Azar & Emiliano Huet-Vaughn & Ioana Marinescu & Bledi Taska & Till von Wachter, 2019. "Minimum Wage Employment Effects and Labor Market Concentration," NBER Working Papers 26101, National Bureau of Economic Research, Inc.
    9. Katerina Sherstyuka & Dolgorsuren Dorjb & Gerard Russo, 2014. "Health Insurance and the Labor Market with Wage Rigidities: Insights from a Laboratory Experiment," Working Papers 201427, University of Hawaii at Manoa, Department of Economics.
    10. Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-33, December.
    11. Pia M. Orrenius & Madeline Zavodny, 2008. "The Effect of Minimum Wages on Immigrants' Employment and Earnings," ILR Review, Cornell University, ILR School, vol. 61(4), pages 544-563, July.
    12. Lenhart, Otto, 2021. "The effects of minimum wages on teenage birth rates," Economics Letters, Elsevier, vol. 198(C).
    13. Jeffrey P. Thompson, 2009. "Using Local Labor Market Data to Re-Examine the Employment Effects of the Minimum Wage," ILR Review, Cornell University, ILR School, vol. 62(3), pages 343-366, April.
    14. Aleksandra Majchrowska & Pawe³ Strawiñski, 2019. "Minimum wage workers in the private sector in Poland: regional perspective," Lodz Economics Working Papers 2/2019, University of Lodz, Faculty of Economics and Sociology.
    15. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast-Food Industry," ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
    16. M. Kemal Biçerli & Merve Kocaman, 2019. "The Impact Of Minimum Wage On Unemployment, Prices, And Growth: A Multivariate Analysis For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(221), pages 65-84, April – J.
    17. Lonnie Stevans & David Sessions, 2001. "Minimum Wage Policy and Poverty in the United States," International Review of Applied Economics, Taylor & Francis Journals, vol. 15(1), pages 65-75.
    18. Lemos, Sara, 2004. "The Effect of the Minimum Wage on Prices in Brazil," IZA Discussion Papers 1071, Institute of Labor Economics (IZA).
    19. Bazen, Stephen & Marimoutou, Velayoudom, 2016. "Federal Minimum Wage Hikes Do Reduce Teenage Employment: The Time Series Effects of Minimum Wages in the US Revisited," IZA Discussion Papers 9864, Institute of Labor Economics (IZA).
    20. Holmlund, Bertil, 2014. "What do labor market institutions do?," Labour Economics, Elsevier, vol. 30(C), pages 62-69.
    21. Meer, J & West, J, 2016. "Effects of the Minimum Wage on Employment Dynamics," Santa Cruz Department of Economics, Working Paper Series qt9776f1wd, Department of Economics, UC Santa Cruz.
    22. Edo, Anthony & Rapoport, Hillel, 2019. "Minimum wages and the labor market effects of immigration," Labour Economics, Elsevier, vol. 61(C).

    More about this item

    Keywords

    minimum wage; teenage employment; state space methods; unobserved components model;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aim:wpaimx:1850. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gregory Cornu (email available below). General contact details of provider: https://edirc.repec.org/data/amseafr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.