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Effect of Minimum Wages on Human Capital Formation

Listed author(s):
  • Jacob Mincer
  • Linda S. Leighton

The hypothesis that minimum wages tend to discourage on the job training is largely supported by our empirical analysis. Direct effects on reported job training and corollary effects on wage growth as estimated in microdata of the National Longitudinal Samples (NLS) and Michigan Income Dynamics (MID) are consistently negative and stronger at lower education levels. Apart from a single exception, no effects are observable among the higher wage group whose education exceeds high school. The effects on job turnover are: a decrease in turnover among young NLS whites, but an increase among young NLS blacks and MID whites. Whether these apparently conflicting findings on turnover reflect a distinction between short and long run adjustments in jobs is a question that requires further testing.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0441.

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Date of creation: Feb 1980
Publication status: published as Mincer, Jacob and Leighton, Linda. "Effect of Minimum Wages on Human Capital Formation." The Economy of Legal Minimum Wages, edited by S. Rottenberg. Washington, D.C.: American Enterprise Institute, 1981.
Handle: RePEc:nbr:nberwo:0441
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  1. Michael L. Wachter & Choongsoo Kim, 1979. "Time Series Changes in Youth Joblessness," NBER Working Papers 0384, National Bureau of Economic Research, Inc.
  2. Robert Swidinsky, 1980. "Minimum Wages and Teenage Unemployment," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 158-171, February.
  3. Jacob Mincer & Boyan Jovanovic, 1981. "Labor Mobility and Wages," NBER Chapters,in: Studies in Labor Markets, pages 21-64 National Bureau of Economic Research, Inc.
  4. J. Wilson Mixon Jr., 1978. "The Minimum Wage and Voluntary Labor Mobility," ILR Review, Cornell University, ILR School, vol. 32(1), pages 67-73, October.
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