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Minimum Wages and Training Revisited

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Author Info
David Neumark
William Wascher

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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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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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Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
  2. David Neumark & William Wascher, 1997. "Do Minimum Wages Fight Poverty?," NBER Working Papers 6127, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Hashimoto, Masanori, 1982. "Minimum Wage Effects on Training on the Job," American Economic Review, American Economic Association, vol. 72(5), pages 1070-87, December. [Downloadable!] (restricted)
  4. Constantine, J. & Neumark, D., 1996. "Training and the Growth in Wage Inequality," Department of Economics Working Papers 172, Department of Economics, Williams College.
    Other versions:
  5. 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, ILR School, Cornell University, vol. 51(2), pages 299-322, January.
    Other versions:
  6. Salop, Joanne & Salop, Steven, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 619-27, November. [Downloadable!] (restricted)
  7. Bowers, Norman & Swaim, Paul, 1994. "Recent Trends in Job Training," Contemporary Economic Policy, Oxford University Press, vol. 12(1), pages 79-88, January.
  8. Alan L. Gustman & Thomas L. Steinmeier, 1982. "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. [Downloadable!] (restricted)
  9. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April. [Downloadable!] (restricted)
  10. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
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  11. Joanne Salop & Steve Salop, 1976. "Self-selection and turnover in the labor market," Special Studies Papers 80, Board of Governors of the Federal Reserve System (U.S.).
  12. Lang, Kevin, 1987. "Pareto Improving Minimum Wage Laws," Economic Inquiry, Oxford University Press, vol. 25(1), pages 145-58, January.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alison Booth & Mark L. Bryan, 2006. "Training, Minimum Wages and the Earnings Distribution," CEPR Discussion Papers 537, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  2. David Fairris & Roberto Pedace, . "The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data," Claremont Colleges Working Papers 2000-36, Claremont Colleges. [Downloadable!]
    Other versions:
  3. Jorn-Steffen Pischke, 2004. "Labor Market Institutions, Wages, and Investment," NBER Working Papers 10735, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Rita Asplund, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy. [Downloadable!]
  5. repec:ese:iserwp: is not listed on IDEAS
  6. Neumark, David & Nizalova, Olena, 2004. "Minimum Wage Effects in the Longer Run," IZA Discussion Papers 1428, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Andrea Bassanini & Giorgio Brunello, 2008. "Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel," Post-Print halshs-00214192_v1, HAL. [Downloadable!]
    Other versions:
  8. Kosali Ilayperuma Simon & Robert Kaestner, 2003. "Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions," NBER Working Papers 9688, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2002. "Work-Related Training and the New National Minimum Wage in Britain," IZA Discussion Papers 595, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Daron Acemoglu & Jörn-Steffen Pischke, 2002. "Minimum Wages and On-the-Job Training," CEP Discussion Papers 0527, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  11. Luis Eduardo Arango & Paula Herrera & Carlos Esteban Posada, . "El salario mínimo: aspectos generales sobre los casos de Colombia y otros países," Borradores de Economia 436, Banco de la Republica de Colombia. [Downloadable!]
    Other versions:
  12. Dustmann; Christian & Schönberg, Uta, 2004. "Training and Union Wages," IZA Discussion Papers 1435, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Tiiu Paas & Marit Hinnosaar & Jaan Masso & Orsolya Szirko, 2004. "Social Protection Systems In The Baltic States," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 26, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
  14. Giorgio Brunello, 2002. "Is Training more Frequent when Wage Compression is Higher? Evidence from 11 European Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  15. Wolfgang Lechthaler & Dennis J. Snower, 2006. "Minimum Wages and Firm Training," Kiel Working Papers 1298, Kiel Institute for the World Economy. [Downloadable!]
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