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Labor market effects of minimum wage shocks

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  • Micheli, Martin

Abstract

The theoretical literature argues that labor markets outcomes are affected by real minimum wages. Real minimum wages, however, co-move with the business cycle; their correlation with labor market outcomes should therefore not be interpreted causally. We employ structural vector autoregression to distinguish between endogenous variation in real minimum wages, e.g. due to changes in the stance of the business cycle, and exogenous shocks. Impulse responses show that in the US, real minimum wage shocks increased teen wages and lowered employment and working hours of teenagers.

Suggested Citation

  • Micheli, Martin, 2019. "Labor market effects of minimum wage shocks," Ruhr Economic Papers 830, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:830
    DOI: 10.4419/86788963
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    References listed on IDEAS

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    Cited by:

    1. Micheli, Martin, 2020. "It is real: On the relation between minimum wages and labor market outcomes for teenagers," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224597, Verein für Socialpolitik / German Economic Association.
    2. Micheli, Martin, 2019. "It is real: On the relation between minimum wages and labor market outcomes for teenagers," Ruhr Economic Papers 829, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    minimum wage; panel VAR; teen employment; teen working hours; teen wages; US;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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