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Minimum Wage Effects on Employment and School Enrollment

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  • David Neumark
  • William Wascher

Abstract

We argue in this paper that the focus on employment effects in recent studies of minimum wages ignores an important interaction between schooling, employment, and the minimum wage. To study these linkages, we estimate a conditional logit model of employment and enrollment outcomes for teenagers using state-year observations for the period 1977 to 1989. The results show a negative influence of minimum wages on school enrollment and a positive effect on the proportion of teens neither employed nor in school. We further suggest that our results are consistent with substitution by employers of higher- for lower-skilled teenagers, with the displaced teens ending up both out of work and out of school.

Suggested Citation

  • David Neumark & William Wascher, 1994. "Minimum Wage Effects on Employment and School Enrollment," NBER Working Papers 4679, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4679
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    References listed on IDEAS

    as
    1. Tauchen, George E, 1981. "Some Evidence on Cross-Sector Effects of the Minimum Wage," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 529-547, June.
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. repec:fth:prinin:315 is not listed on IDEAS
    4. 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.
    5. Mincer, Jacob, 1976. "Unemployment Effects of Minimum Wages," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 87-104, August.
    6. Freeman, Richard B. & Wise, David A. (ed.), 1982. "The Youth Labor Market Problem," National Bureau of Economic Research Books, University of Chicago Press, number 9780226261614, March.
    7. David Neumark & William L. Wascher, 1993. "Employment effects of minimum and subminimum wages: reply to Card, Katz, and Krueger," Working Paper Series / Economic Activity Section 144, Board of Governors of the Federal Reserve System (U.S.).
    8. David Card, 1991. "Do Minimum Wages Reduce Employment? A Case Study of California, 1987-89," NBER Working Papers 3710, National Bureau of Economic Research, Inc.
    9. Simon Rottenberg, 1981. "The Economics of Legal Minimum Wages," Books, American Enterprise Institute, number 971842, September.
    10. Michael L. Wachter & Choongsoo Kim, 1982. "Time Series Changes in Youth Joblessness," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 155-198, National Bureau of Economic Research, Inc.
    11. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
    12. David Neumark & William Wascher, 1994. "Minimum Wage Effects and Low-Wage Labor Markets: A Disequilibrium Approach," NBER Working Papers 4617, National Bureau of Economic Research, Inc.
    13. Ragan, James F, Jr, 1977. "Minimum Wages and the Youth Labor Market," The Review of Economics and Statistics, MIT Press, vol. 59(2), pages 129-136, May.
    14. Richard B. Freeman, 1982. "Economic Determinants of Geographic and Individual Variation in the Labor Market Position of Young Persons," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 115-154, National Bureau of Economic Research, Inc.
    15. David Card & Lawrence Katz & Alan B. Krueger, 1993. "Comment on David Neumark and William Wascher, "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws"," Working Papers 695, Princeton University, Department of Economics, Industrial Relations Section..
    16. 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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    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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