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The Differential Impact Of Federal And State Minimum Wages On Teenage Employment

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  • Stephen Bazen

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille)

  • Julie Le Gallo

    () (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UBFC - Université Bourgogne Franche-Comté - UFC - Université de Franche-Comté)

Abstract

The "new economics of the minimum wage" is based on the findings from case studies that minimum wages had no effect on employment and may even have increased it. This conclusion is at odds with the findings of earlier studies and those of a number of more recent studies which find a statistically significant negative effect on teenage employment. These conflicting results constitute a puzzle. We find that this is due to minimum wage hikes implemented at the state-level having no negative effects on teenage employment during the 1980s and 1990s, while the federal hikes of the 1990s did. In states without their own minimum wages, the decline in the relative value of the federal minimum wage during the 1980s gave rise to an increase in low-wage employment that was subsequently checked and reversed by the federal hikes in the early 1990s.

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  • Stephen Bazen & Julie Le Gallo, 2009. "The Differential Impact Of Federal And State Minimum Wages On Teenage Employment," Working Papers halshs-00408016, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00408016 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00408016
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    Cited by:

    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. John T. Addison & McKinley L. Blackburn & Chad D. Cotti, 2012. "The Effect of Minimum Wages on Labour Market Outcomes: County-Level Estimates from the Restaurant-and-Bar Sector," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 412-435, September.
    3. Luca Colombo & Paola Labrecciosa & Luca Lambertini, 2008. "Are optimal punishments always optimal?," Working Paper series 01_08, Rimini Centre for Economic Analysis.
    4. John T. Addison & McKinley L. Blackburn & Chad D. Cotti, 2012. "The Effect of Recent Increases in the U.S. Minimum Wage: Results from Three Data Sources," Working Paper series 58_12, Rimini Centre for Economic Analysis.
    5. Bazen, Stephen & Le Gallo, Julie, 2009. "The state-federal dichotomy in the effects of minimum wages on teenage employment in the United States," Economics Letters, Elsevier, vol. 105(3), pages 267-269, December.
    6. Kristine Laura S. Canales, 2014. "The effects of a minimum wage on employment outcomes: an application of regression discontinuity design," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 51(2), pages 97-120, December.

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    Keywords

    Federal Minimum Wages; State Minimum Wages; Teenage Employment;

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