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Minimum Wage Effects in the Longer Run

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Author Info

  • Neumark, David

    ()
    (University of California, Irvine)

  • Nizalova, Olena Y.

    ()
    (Kyiv School of Economics)

Abstract

Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, lower current labor supply because of lower wages, and diminished training and skill acquisition. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if short-term wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20’s, they earn less and perhaps work less the longer they were exposed to a higher minimum wage, especially as a teenager. The adverse longer-run effects of facing high minimum wages as a teenager are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1428.

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Length: 46 pages
Date of creation: Dec 2004
Date of revision:
Publication status: published in: Journal of Human Resources, 2007, 42 (2), 435-452
Handle: RePEc:iza:izadps:dp1428

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Keywords: earnings; minimum wage; employment; hours;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Minimum wages and the young
    by chris dillow in Stumbling and Mumbling on 2007-03-19 12:49:35
  2. Youth unemployment
    by Eric Crampton in Offsetting Behaviour on 2010-05-06 02:39:00
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Cited by:
  1. J. O’Roark & William Wood, 2011. "Determinants of congressional minimum wage support: the role of economic education," Public Choice, Springer, vol. 147(1), pages 209-225, April.
  2. Gorry, Aspen, 2013. "Minimum wages and youth unemployment," European Economic Review, Elsevier, vol. 64(C), pages 57-75.
  3. Draca, Mirko & Machin, Steve & Van Reenen, John, 2006. "Minimum Wages and Firm Profitability," CEPR Discussion Papers 5456, C.E.P.R. Discussion Papers.
  4. Mo, Pak Hung, 2011. "Minimum Wage Legislation and Economic Growth: Channels and Effects," MPRA Paper 35820, University Library of Munich, Germany.
  5. Leigh, Andrew, 2008. "Estimating the impact of gubernatorial partisanship on policy settings and economic outcomes: A regression discontinuity approach," European Journal of Political Economy, Elsevier, vol. 24(1), pages 256-268, March.
  6. Jones, Melanie K. & Jones, Richard J. & Murphy, Philip D. & Sloane, Peter J., 2005. "The Dynamics of the National Minimum Wage: Transitions Between Different Labour Market States," IZA Discussion Papers 1690, Institute for the Study of Labor (IZA).
  7. Loughrey, Jason & Donnellan, Trevor & Hanrahan, Kevin & Hennessy, Thia, 2013. "Agricultural Labour Market Flexibility in the EU and Candidate Countries," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152330, International Agricultural Trade Research Consortium.
  8. Jonathan Meer & Jeremy West, 2013. "Effects of the Minimum Wage on Employment Dynamics," NBER Working Papers 19262, National Bureau of Economic Research, Inc.
  9. Oguzhan C. Dincer & Peter J. Lambert, 2012. "Taking care of your own: ethnic and religious heterogeneity and income inequality," Journal of Economic Studies, Emerald Group Publishing, vol. 39(3), pages 290-313, December.
  10. Zsofia Barany, 2011. "The minimum wage and inequality - the effects of education and technology," Sciences Po publications info:hdl:2441/eu4vqp9ompq, Sciences Po.
  11. Zsófia L. Bárány, 2011. "The Minimum Wage and Inequality - The Effects of Education and Technology," CEP Discussion Papers dp1076, Centre for Economic Performance, LSE.
  12. Aspen Gorry, 2008. "Labor Market Connections, Minimum Wages, and Youth Employment," 2008 Meeting Papers 794, Society for Economic Dynamics.
  13. Maria J. Hanratty, 2006. "Has the Food Stamp program become more accessible? Impacts of recent changes in reporting requirements and asset eligibility limits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(3), pages 603-621.
  14. Steven J. Davis & Luis Rivera-Batiz, 2005. "The Climate for Business Development and Employment Growth in Puerto Rico," NBER Working Papers 11679, National Bureau of Economic Research, Inc.

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