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Minimum Wage Effects in the Longer Run

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  • David Neumark
  • Olena Nizalova

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 work less and earn 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10656.

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Date of creation: Jul 2004
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Handle: RePEc:nbr:nberwo:10656

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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. Oguzhan C. Dincer & Peter J. Lambert, 2006. "Taking care of your own: Ethnic and religious heterogeneity and income inequality," Working Papers 48, ECINEQ, Society for the Study of Economic Inequality.
  2. Gorry, Aspen, 2010. "Minimum Wages and Youth Employment," MPRA Paper 25296, University Library of Munich, Germany.
  3. Mirko Draca & Stephen Machin & John Van Reenen, 2006. "Minimum Wages and Firm Profitability," CEP Discussion Papers dp0715, Centre for Economic Performance, LSE.
  4. Mo, Pak Hung, 2011. "Minimum Wage Legislation and Economic Growth: Channels and Effects," MPRA Paper 35820, University Library of Munich, Germany.
  5. 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.
  6. 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.
  7. 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.
  8. Andrew Leigh, 2007. "Estimating the Impact of Gubernatorial Partisanship on Policy Settings and Economic Outcomes: A Regression Discontinuity Approach," CEPR Discussion Papers 556, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  9. Aspen Gorry, 2008. "Labor Market Connections, Minimum Wages, and Youth Employment," 2008 Meeting Papers 794, Society for Economic Dynamics.
  10. Zsófia L. Bárány, 2011. "The Minimum Wage and Inequality - The Effects of Education and Technology," CEP Discussion Papers dp1076, Centre for Economic Performance, LSE.
  11. 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).
  12. 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.
  13. Zsofia Barany, 2011. "The minimum wage and inequality - the effects of education and technology," Sciences Po publications info:hdl:2441/eu4vqp9ompq, Sciences Po.

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