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Minimum Wages and Training Revisited

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  • David Neumark
  • William Wascher

Abstract

Theory predicts that minimum wages will reduce employer-provided on-the-job training designed to improve workers' skills on the current job, but may increase the amount of training that workers obtain to qualify for a job. We estimate the effects of minimum wages on the amount of both types of training received by young workers by exploiting cross-state variation in minimum wage increases. The evidence provides considerable support for the hypothesis that higher minimum wages reduce training (especially formal training) aimed at improving skills on the current job. At the same time, there is little or no evidence that minimum wages increase training undertaken to qualify for or obtain jobs. Consequently, it appears that, overall, minimum wages substantially reduce training received by young workers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6651.

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Date of creation: Jul 1998
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Publication status: published as Neumark, David and William Wascher. "Minimum Wages And Training Revisited," Journal of Labor Economics, 2001, v19(3,Jul), 563-595.
Handle: RePEc:nbr:nberwo:6651

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  1. Adam J. Grossberg & Paul Sicilian, 1999. "Minimum Wages, On-the-Job Training, and Wage Growth," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 539-556, January.
  2. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  3. Ronald G. Ehrenberg & Alan J. Marcus, 1982. "Minimum Wages and Teenagers' Enrollment-Employment Outcomes: A Multinomial Logit Model," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 39-58.
  4. Rosella Gardecki & David Neumark, 1998. "Order from chaos? The effects of early labor market experiences on adult labor market outcomes," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(2), pages 299-322, January.
  5. Norman Bowers & Paul Swaim, 1994. "Recent Trends In Job Training," Contemporary Economic Policy, Western Economic Association International, vol. 12(1), pages 79-88, 01.
  6. Ann P. Bartel, 1992. "Training, Wage Growth and Job Performance: Evidence From a Company Database," NBER Working Papers 4027, National Bureau of Economic Research, Inc.
  7. Jill Constantine & David Neumark, 1994. "Training and the Growth of Wage Inequality," NBER Working Papers 4729, National Bureau of Economic Research, Inc.
  8. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, Elsevier, vol. 64(1), pages 25-40, April.
  9. Oren M. Levin-Waldman, 1996. "The Minimum Wage and the Path Toward a High Wage Economy," Economics Working Paper Archive wp_166, Levy Economics Institute.
  10. Hashimoto, Masanori, 1982. "Minimum Wage Effects on Training on the Job," American Economic Review, American Economic Association, American Economic Association, vol. 72(5), pages 1070-87, December.
  11. Lang, Kevin, 1987. "Pareto Improving Minimum Wage Laws," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 25(1), pages 145-58, January.
  12. Salop, Joanne & Salop, Steven, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 90(4), pages 619-27, November.
  13. David Neumark & William Wascher, 2002. "Do Minimum Wages Fight Poverty?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 40(3), pages 315-333, July.
  14. Alan L. Gustman & Thomas L. Steinmeier, 1980. "Labor Markets and Evaluations of Vocational Training Programs in the Public High Schools - Toward a Framework for Analysis," NBER Working Papers 0478, National Bureau of Economic Research, Inc.
  15. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 299-312, March.
  16. Joanne Salop & Steve Salop, 1976. "Self-selection and turnover in the labor market," Special Studies Papers, Board of Governors of the Federal Reserve System (U.S.) 80, Board of Governors of the Federal Reserve System (U.S.).
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