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Minimum Wage Effects on Employment, Substitution, and the Teenage Labor Supply: Evidence from Personnel Data

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  • Laura Giuliano

    ()
    (Department of Economics, University of Miami)

Abstract

Using personnel data from a large U.S. retail firm, I examine the firm’s response to the 1996 federal minimum wage increase. Compulsory increases in average wages had negative but statistically insignificant effects on overall employment. However, increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers, especially younger and more affluent teenagers. Further analysis suggests a pattern consistent with non-competitive models. Where the legislation affected mainly the wages of teenagers and so was only moderately binding, it led both to higher teenage labor market participation and to higher absolute employment of teenagers.

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File URL: http://www.bus.miami.edu/_assets/files/faculty-and-research/academic-departments/eco/eco-working-papers/2011/WP2011-12.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2011-12.

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Length: 52 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming: Under Review
Handle: RePEc:mia:wpaper:2011-12

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Keywords: minimum wage; employment; teenage employment;

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  1. V. Bhaskar & Ted To, 1996. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Labor and Demography 9603001, EconWPA, revised 21 May 1996.
  2. 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..
  3. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
  4. Allegretto, Sylvia & Dube, Arindrajit & Reich, Michael, 2010. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data," Institute for Research on Labor and Employment, Working Paper Series qt7jq2q3j8, Institute of Industrial Relations, UC Berkeley.
  5. Pedro Portugal & Ana Rute Cardoso, 2006. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 988-1013, 09.
  6. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad, 2008. "The Effect of Minimum Wages on Wages and Employment: County-Level Estimates for the United States," IZA Discussion Papers 3300, Institute for the Study of Labor (IZA).
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Raising the Minimum Wage to $9 Would Harm Most Vulnerable Job Seekers
    by James Sherk in The Foundry on 2013-04-12 17:00:46
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Cited by:
  1. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
  2. Cerejeira, João & Kızılca, Kemal & Portela, Miguel & Sá, Carla, 2012. "Minimum Wage, Fringe Benefits, Overtime Payments and the Gender Wage Gap," IZA Discussion Papers 6370, Institute for the Study of Labor (IZA).
  3. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, Elsevier.
  4. Dube, Arindrajit, 2013. "Minimum Wages and Aggregate Job Growth: Causal Effect or Statistical Artifact?," IZA Discussion Papers 7674, Institute for the Study of Labor (IZA).
  5. Alan Manning, 2010. "Imperfect competition in the labour market," LSE Research Online Documents on Economics 28729, London School of Economics and Political Science, LSE Library.
  6. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2013. "Minimum wage increases in a recessionary environment," Labour Economics, Elsevier, vol. 23(C), pages 30-39.

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