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

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  • Laura Giuliano

    () (Department of Economics, University of Miami)

Abstract

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.

Suggested Citation

  • Laura Giuliano, 2009. "Minimum wage effects on employment, substitution, and the teenage labor supply: Evidence from personnel data," Working Papers 2010-5, University of Miami, Department of Economics.
  • Handle: RePEc:mia:wpaper:2010-5
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    Cited by:

    1. Jeffrey Clemens, 2015. "The Minimum Wage and the Great Recession: Evidence from the Current Population Survey," NBER Working Papers 21830, National Bureau of Economic Research, Inc.
    2. Strobl, Eric & Walsh, Frank, 2016. "Monopsony, minimum wages and migration," Labour Economics, Elsevier, vol. 42(C), pages 221-237.
    3. Jeffrey Clemens & Michael Wither, 2014. "The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers," NBER Working Papers 20724, National Bureau of Economic Research, Inc.
    4. Piotr Lewandowski & Agnieszka Kaminska, 2015. "The effects of minimum wage on a labour market with high temporary employment," IBS Working Papers 7/2015, Instytut Badan Strukturalnych.
    5. Assoc. prof. Claudiu George Bocean Ph. D, 2015. "Relationships Between Wages And Employment Indicators," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(24), pages 41-50, APRIL.
    6. Michael R. Strain & Peter Brummund, 2016. "Real and permanent minimum wages," AEI Economics Working Papers 875967, American Enterprise Institute.
    7. Grace Lordan & David Neumark, 2017. "People Versus Machines: The Impact of Minimum Wages on Automatable Jobs," NBER Working Papers 23667, National Bureau of Economic Research, Inc.
    8. Arindrajit Dube & T. William Lester & Michael Reich, 2016. "Minimum Wage Shocks, Employment Flows, and Labor Market Frictions," Journal of Labor Economics, University of Chicago Press, vol. 34(3), pages 663-704.
    9. Micheli, Martin, 2016. "Minimum wage: Redistributive or discriminatory policy?," Annual Conference 2016 (Augsburg): Demographic Change 145830, Verein für Socialpolitik / German Economic Association.
    10. Kabátek, Jan, 2015. "Happy Birthday, You're Fired! The Effects of Age-Dependent Minimum Wage on Youth Employment Flows in the Netherlands," IZA Discussion Papers 9528, Institute for the Study of Labor (IZA).
    11. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2013. "Minimum wage increases in a recessionary environment," Labour Economics, Elsevier, vol. 23(C), pages 30-39.
    12. Evan Totty, 2017. "The Effect Of Minimum Wages On Employment: A Factor Model Approach," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1712-1737, October.
    13. Kemal Kizilca & João Cerejeira & Miguel Portela & Carla Sá, 2010. "Minimum wage, fringe benefits, overtime payments and the gender wage gap," NIPE Working Papers 34/2010, NIPE - Universidade do Minho.
    14. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, Elsevier.
    15. Andrew Hanson & Zackary Hawley, 2014. "The $10.10 Minimum Wage Proposal: An Evaluation across States," Journal of Labor Research, Springer, vol. 35(4), pages 323-345, December.
    16. Dube, Arindrajit & Giuliano, Laura & Leonard, Jonathan, 2015. "Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior," IZA Discussion Papers 9149, Institute for the Study of Labor (IZA).
    17. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
    18. Dube, Arindrajit, 2013. "Minimum Wages and Aggregate Job Growth: Causal Effect or Statistical Artifact?," IZA Discussion Papers 7674, Institute for the Study of Labor (IZA).
    19. repec:eee:labeco:v:47:y:2017:i:c:p:163-181 is not listed on IDEAS
    20. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2018. "The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the United States Using a Bunching Estimator," CEP Discussion Papers dp1531, Centre for Economic Performance, LSE.
    21. Shanshan Liu & Thomas J. Hyclak & Krishna Regmi, 2016. "Impact of the Minimum Wage on Youth Labor Markets," LABOUR, CEIS, vol. 30(1), pages 18-37, March.
    22. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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