Advanced Search
MyIDEAS: Login to save this paper or follow this series

Low-Cost Student Labor: The Use and Effects of the Subminimum Wage Provisions for Full-time Students


Author Info

  • Richard B. Freeman
  • Wayne B. Gray
  • Casey Ichniowski


Section 14(b) of the Fair Labor Standards Act permits certain classes of employers to pay full-time students a wage fifteen percent below the minimum wage. This study develops a new data base from administrative records, our own survey of participating company and establishment managers, and published information on local labor markets to investigate employer responses to a subminimum wage program. Our analysis of the full-time student certification program has yielded four general conclusions. First, while the most important users of the program are institutions of higher education, certain non-educational employers in the retail and service sectors employ a sufficiently large and increasing number of students below the minimum wage to suggest that the program has considerable attractiveness in the private sector. Second, area labor market conditions are a major determinant of which establishments with permits to pay students subminimum wages in fact make use of the program and the extent of that use. Establishments in areas characterized by high wages and low levels of unemployment, implying high costs in employing or locating substitute labor, make more use of student subminimum workers than establishments in areas with lower costs for substitute labor. The magnitude of the effect of area wage is, however, sensitive to the precise specification of the full-time student employment equation and the variable used to measure area wage. Although this sensitivity leads to variations in the estimation of the elasticity of substitution between student and other labor, reasonable estimates of this elasticity range from .5 to 1.0. Among company characteristics, unionism reduces program usage, while certain company incentives promote use of the program. Finally, restrictions in the law placed on hours worked at the subminimum appear to be a major reason for failure to employ students under this program.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0765.

as in new window
Date of creation: Sep 1981
Date of revision:
Handle: RePEc:nbr:nberwo:0765

Note: LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page:
More information through EDIRC

Related research



No references listed on IDEAS
You can help add them by filling out this form.


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

Cited by:
  1. Falk, Armin & Fehr, Ernst & Zehnder, Christian, 2005. "The Behavioral Effects of Minimum Wages," IZA Discussion Papers 1625, Institute for the Study of Labor (IZA).
  2. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast Food Industry," NBER Working Papers 3997, National Bureau of Economic Research, Inc.
  3. repec:fth:prinin:330 is not listed on IDEAS
  4. Katz, L.F. & Krueger, A.B, 1991. "The Effect Of The New Minimum Wage Law In A Low-Wage Labor Market," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1544, Harvard - Institute of Economic Research.
  5. David Card, 1992. "Using regional variation in wages to measure the effects of the federal minimum wage," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 22-37, October.
  6. Olivia S. Mitchell, 1982. "The Labor Market Impact of Federal Regulation: OSHA, ERISA, EEO, and Minimum Wage," NBER Working Papers 0844, National Bureau of Economic Research, Inc.
  7. repec:fth:prinin:316 is not listed on IDEAS
  8. Alan B. Krueger, 1994. "The Effect of the Minimum Wage When It Really Bites: A Reexamination of the Evidence from Puerto Rico," NBER Working Papers 4757, National Bureau of Economic Research, Inc.
  9. David Neumark & William Wascher, 1991. "Evidence on Employment Effects of Minimum Wages and Subminimum Wage Provisions From Panel Data on State Minimum Wage Laws," NBER Working Papers 3859, National Bureau of Economic Research, Inc.
  10. repec:fth:prinin:278 is not listed on IDEAS


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0765. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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