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Does Higher Minimum Wage Discourage College Enrollment? A Cross-State Empirical Study of the United States

Author

Listed:
  • Arindam Mandal

    (Siena University, New York, U.S.A.)

  • Sumant Rai

    (Independent Scholar, Georgia, U.S.A.)

  • Elias K. Shukralla

    (Siena University, New York, U.S.A.)

Abstract

The paper investigates the impact of minimum wage increase on college enrollment in the U.S. using a panel of 50 U.S. states during the period 2009-2018. By examining the impact of minimum wage on college enrollment, particularly within different types of post-secondary institutions, our study adds to the existing literature. This is a departure from previous research, which predominantly concentrated on two-year college enrollment. We find evidence that raising minimum wages adversely affects overall college enrollment. However, the results vary depending on the type of colleges. The increase in minimum wage has a negative impact on the enrollment of two-year colleges, while positively affecting the enrollment in four-year public colleges. We use state level aggregated data and estimate our results using a System Generalized Method of Moments (System GMM) to account for endogeneity concerns surrounding the minimum wage and college enrollment.

Suggested Citation

  • Arindam Mandal & Sumant Rai & Elias K. Shukralla, 2025. "Does Higher Minimum Wage Discourage College Enrollment? A Cross-State Empirical Study of the United States," American Business Review, Pompea College of Business, University of New Haven, vol. 28(2), pages 618-634, November.
    • Handle: RePEc:ris:ambsrv:021863
    DOI: 10.37625/abr.28.2.618-634
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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • 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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