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Long-Term Impact of Youth Minimum Wages: Evidence from Two Decades of Individual Longitudinal Data

  • Cardoso, Ana Rute

    ()

    (IAE Barcelona (CSIC))

This paper quantifies the long-run impact of exposure to youth minimum wages and sheds light on its mechanisms. It uses remarkable longitudinal data spanning for twenty years and explores legislative changes that define groups of teenagers exposed for different durations. After controlling for the contemporaneous impact of the minimum wage, its long-run impact translates into: an overall wage premium, consistent with an upgrading in the quality of jobs offered; a flatter tenure-earnings profile, consistent with lower initial investment in firm-specific training. Interestingly, the overall wage premium increases with exposure and the tenure-earnings profile is flatter the longer the exposure.

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File URL: http://ftp.iza.org/dp4236.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4236.

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Length: 42 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4236
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  1. Wayne Simpson, 1984. "An Econometric Analysis of Industrial Training in Canada," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 435-451.
  2. Alison L. Booth & Gylfi Zoega, 2004. "Is wage compression a necessary condition for firm-financed general training?," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 88-97, January.
  3. Portugal, Pedro & Cardoso, Ana Rute, 2002. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," IZA Discussion Papers 544, Institute for the Study of Labor (IZA).
  4. David Fairris & Roberto Pedace, 2003. "The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data," Working Papers 03-04, Center for Economic Studies, U.S. Census Bureau.
  5. Neumark, David & Wascher, William, 2001. "Minimum Wages and Training Revisited," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 563-95, July.
  6. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
  7. Neumark, David & Wascher, William, 1995. "Minimum Wage Effects on Employment and School Enrollment," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 199-206, April.
  8. Cahuc, P. & Michel, P., 1992. "Minimum Wage, Unemployment and Growth," Papiers d'Economie Mathématique et Applications 92.35, Université Panthéon-Sorbonne (Paris 1).
  9. José Ferreira Machado & José Mata, 1998. "Earning Functions in Portugal 1982-1994: Evidence From Quantile Regressions," Working Papers w199802, Banco de Portugal, Economics and Research Department.
  10. Pereira, Sonia C., 2003. "The impact of minimum wages on youth employment in Portugal," European Economic Review, Elsevier, vol. 47(2), pages 229-244, April.
  11. Ravn, Morten O & Sorensen, Jan Rose, 1999. " Schooling, Training, Growth and Minimum Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 441-57, September.
  12. 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).
  13. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
  14. 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.
  15. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  16. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority and Earnings," Working papers 407, Massachusetts Institute of Technology (MIT), Department of Economics.
  17. Hyslop, Dean & Stillman, Steven, 2007. "Youth minimum wage reform and the labour market in New Zealand," Labour Economics, Elsevier, vol. 14(2), pages 201-230, April.
  18. David Neumark & William Wascher, 1995. "The Effects of Minimum Wages on Teenage Employment and Enrollment: Evidence from Matched CPS Surveys," NBER Working Papers 5092, National Bureau of Economic Research, Inc.
  19. Michele Campolieti & Tony Fang & Morley Gunderson, 2003. "How Minimum Wages Affect Schooling-Employment Outcomes in Canada, 1993-1999," Journal of Labor Research, Transaction Publishers, vol. 26(3), pages 533-545, August.
  20. 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.
  21. 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.
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