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Minimum Wage Effects in the Longer Run

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  • Neumark, David

    ()
    (University of California, Irvine)

  • Nizalova, Olena Y.

    ()
    (University of Kent)

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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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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