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Minimum wage effects on employment, substitution, and the teenage labor supply: Evidence from personnel data

  • Laura Giuliano

    ()

    (Department of Economics, University of Miami)

Using personnel data from a large U.S. retail firm with more than 700 stores nationwide, this study examines the firm’s response to the 1996 federal minimum wage increase. First, increases in average wages had negative, but statistically insignificant effects on overall employment. Second, however, increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers, and especially of more productive teenagers from affluent ZIP codes. This second result is consistent with models that link labor demand to labor market participation, and in particular suggests informational asymmetries may be important in the teenage labor market.

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Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2010-5.

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Length: 52 pages
Date of creation: Sep 2009
Date of revision:
Publication status: Published
Handle: RePEc:mia:wpaper:2010-5
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Web page: http://www.bus.miami.edu/faculty-and-research/academic-departments/economics/index.html

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  1. V. Bhaskar & Ted To, 1996. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Labor and Demography 9603001, EconWPA, revised 21 May 1996.
  2. Tom Ahn & Peter Arcidiacono & Walter Wessels, 2011. "The Distributional Impacts of Minimum Wage Increases When Both Labor Supply and Labor Demand Are Endogenous," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(1), pages 12-23, January.
  3. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," NBER Working Papers 4058, National Bureau of Economic Research, Inc.
  4. David Neumark & William Wascher, 2011. "Does a Higher Minimum Wage Enhance the Effectiveness of the Earned Income Tax Credit?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(4), pages 712-746, July.
  5. Pedro Portugal & Ana Rute Cardoso, 2006. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 988-1013, 09.
  6. 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.
  7. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad, 2008. "The Effect of Minimum Wages on Wages and Employment: County-Level Estimates for the United States," IZA Discussion Papers 3300, Institute for the Study of Labor (IZA).
  8. Card, David & Mas, Alexandre & Moretti, Enrico & Saez, Emmanuel, 2010. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," Institute for Research on Labor and Employment, Working Paper Series qt48z7z9dn, Institute of Industrial Relations, UC Berkeley.
  9. Allegretto, Sylvia & Dube, Arindrajit & Reich, Michael, 2010. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data," Institute for Research on Labor and Employment, Working Paper Series qt7jq2q3j8, Institute of Industrial Relations, UC Berkeley.
  10. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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