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A Model for Analyzing Youth Labor Market Policies

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  • Alan L. Gustman
  • Thomas L. Steinmeier

Abstract

This paper formulates a model of the youth labor market. At the heart of the model is a minimum wage restriction which causes some youths to become unemployed and prevents others from training. Labor is assumed to be heterogeneous in performance on skilled iobs and is less productive as youths than as adults simply because of immaturity. The model is applied to analyze the effects of three representative policies: a youth subminimum wage, subsidies paid to firms that hire youths, and training subsidies that offset the costs of on-the-job training.

Suggested Citation

  • Alan L. Gustman & Thomas L. Steinmeier, 1985. "A Model for Analyzing Youth Labor Market Policies," NBER Working Papers 1621, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1621
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    References listed on IDEAS

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    1. Martin S. Feldstein & David T. Ellwood, 1982. "Teenage Unemployment: What is the Problem?," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 17-35, National Bureau of Economic Research, Inc.
    2. Richard B. Freeman & David A. Wise, 1982. "The Youth Labor Market Problem: Its Nature Causes and Consequences," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 1-16, National Bureau of Economic Research, Inc.
    3. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
    4. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
    5. Alan L. Gustman & Thomas L. Steinmeier, 1980. "Labor Markets and Evaluations of Vocational Training Programs in the Public High Schools - Toward a Framework for Analysis," NBER Working Papers 0478, National Bureau of Economic Research, Inc.
    6. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
    7. David T. Ellwood, 1982. "Teenage Unemployment: Permanent Scars or Temporary Blemishes?," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 349-390, National Bureau of Economic Research, Inc.
    8. Richard B. Freeman & James L. Medoff, 1982. "The Youth Labor Market Problem in the United States: An Overview," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 35-74, National Bureau of Economic Research, Inc.
    9. Robert E. Hall, 1982. "The Minimum Wage and Job Turnover in Markets for Young Workers," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 475-498, National Bureau of Economic Research, Inc.
    10. Gustman, Alan L & Steinmeier, Thomas L, 1981. "The Impact of Wages and Unemployment on Youth Enrollment and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 553-560, November.
    11. Linda Leighton & Jacob Mincer, 1982. "Labor Turnover and Youth Unemployment," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 235-276, National Bureau of Economic Research, Inc.
    12. Michael C. Barth, 1974. "Market Effects of a Wage Subsidy," ILR Review, Cornell University, ILR School, vol. 27(4), pages 572-585, July.
    13. Lorne Carmichael, 1983. "Firm-Specific Human Capital and Promotion Ladders," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 251-258, Spring.
    14. Meyer, Robert H & Wise, David A, 1983. "Discontinuous Distributions and Missing Persons: The Minimum Wage and Unemployed Youth," Econometrica, Econometric Society, vol. 51(6), pages 1677-1698, November.
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    16. Venti, Steven F, 1984. "The Effects of Income Maintenance on Work, Schooling, and Non-Market Activities of Youth," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 16-25, February.
    17. Daniel S. Hamermesh, 1970. "Manpower Subsidies and the Firm," Working Papers 392, Princeton University, Department of Economics, Industrial Relations Section..
    18. Carmichael, Lorne, 1983. "Does Rising Productivity Explain Seniority Rules for Layoffs?," American Economic Review, American Economic Association, vol. 73(5), pages 1127-1131, December.
    19. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
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