Journal of Labor Research

, Volume 34, Issue 3, pp 253–280 | Cite as

The Effect of the Minimum Wage on Covered Teenage Employment

Article

Abstract

Unlike previous studies on the minimum wage, which focused on its effect on total teenage employment, we examine its effect on covered employment. A covered job was defined to be one paying the minimum wage or more. Using contemporary wages to classify workers this way may inflate the estimated effect of minimum wages on covered employment. To avoid this bias, covered jobs are identified using a logit procedure run over years in which the minimum age was not increased. We find that minimum wages reduced covered employment significantly more than total employment. We also show that covered employment may be overstated in the period following an increase in the minimum wage.

JEL Codes

J08 J38 

References

  1. Abrevaya J, Hausman J (1999) Semiparametric estimation with mismeasured dependent variables: an application to duration models for unemployment spells. Annales DEconomie et de Statistique 55–56:243–275Google Scholar
  2. Ahn T, Arcidiacono P, Wessels W (2011) The distributional impacts of minimum wage increases when both labor supply and labor demand are endogenuous. J Bus Econ Stat 29(1):12–23CrossRefGoogle Scholar
  3. Ashenfelter O, Smith RS (1979) Compliance with the minimum wage law. J Polit Econ 87(2):333–350CrossRefGoogle Scholar
  4. Bollinger CR (1998) Measurement error in the current population survey: a nonparametric look. J Labor Econ 16(3):576–594CrossRefGoogle Scholar
  5. Bound J, Krueger AB (1991) The extent of measurement error in longitudinal earnings data: Do Two wrongs make a right. J Labor Econ 9(1):1–24CrossRefGoogle Scholar
  6. Brown C, Gilroy C, Kohen A (1982) The effect of the minimum wage on employment and unemployment. J Econ Lit 20(2):487–528Google Scholar
  7. Burkhauser RV, Couch KC, Wittenburg DC (2000) A reassessment of the New economics of the minimum wage literature with monthly data from the current population survey. J Labor Econ 18(4):653–680CrossRefGoogle Scholar
  8. Burnette J, Holmes JM, Hutton PA (2007) The effect of minimum wage increases on 16–19 year olds: a difference-in-differences analysis. Working paperGoogle Scholar
  9. Card D (1992a) Using regional variation in wages to measure the effects of the federal minimum wage. Ind Labor Relat Rev 46(1):22–37CrossRefGoogle Scholar
  10. Card D (1992b) Do minimum wages reduce employment? a case study of California, 1987–89. Ind Labor Relat Rev 46(1):38–54CrossRefGoogle Scholar
  11. Card D, Krueger AB (1994) Minimum wages and employment: a case study of the fast-food industry in New jersey and Pennsylvania. Am Econ Rev 84(4):772–793Google Scholar
  12. Card D, Krueger AB (1995) Myth and measurement: the new economics of the minimum wage. Princeton University Press, PrincetonGoogle Scholar
  13. Currie J, Fallick BC (1996) The minimum wage and the employment of youth: evidence from the NLSY. J Hum Resour 31(2):404–428CrossRefGoogle Scholar
  14. Deere D, Murphy KM, Welch F (1995) Employment and the 1990–1991 minimum-wage hike. Am Econ Rev 85(2):232–237Google Scholar
  15. Dube A, Lester TW, Reich M (2010) Minimum wage effects cross sate borders: estimates using contiguous counties. Rev Econ Stat 92:945–964CrossRefGoogle Scholar
  16. Falk A, Fehr E, Zehnder C (2006) Fairness perceptions and reservation wages – the behavior effects of minimum wage laws. Q J Econ 121(4):1347–1381Google Scholar
  17. Hausman J (2001) Mismeasured variables in econometric analysis: problems from the right and problems from the left. J Econ Perspect 15(4):57–67CrossRefGoogle Scholar
  18. Haugen S (2003) Characteristics of minimum wage workers in 2002. Monthly Labor Review pp. 37–40Google Scholar
  19. Haugen S, Mellor EF (1990) Estimating the number of minimum wage workers. Mon Labor Rev 113(1):70–74Google Scholar
  20. Neumark D (2001) The employment effects of minimum wages: evidence from a Pre-specified research design the employment effects of minimum wages. Ind Relat 40(1):121–144CrossRefGoogle Scholar
  21. Neumark D, Wascher W (1992) Employment effects of minimum and submimimum wages: panel data on state minimum wage laws. Ind Labor Relat Rev 46(1):55–81CrossRefGoogle Scholar
  22. Neumark D, Wascher W (2002) State-level estimates of minimum wage effects: new evidence and interpretations for disequilibrium methods. J Hum Resour 37(1):35–62Google Scholar
  23. Neumark D, Wascher W (2008) Minimum Wages. MIT Press, Cambridge and LondonGoogle Scholar
  24. Orazem PF, Mattila JP (2002) Minimum wage effects on hours, employment and number of firms: the Iowa case. J Labor Res 23(1):3–23CrossRefGoogle Scholar
  25. Sabia J, Burkhauser R (2010) Minimum wages and poverty: will a $9.50 federal minimum wage really help the working poor? South Econ J 76(3):592–623Google Scholar
  26. Schiller BR (1994) Below-minimum-wage workers: implications for minimum wage models. Q J Econ Finance 34(2):131–143, SummerCrossRefGoogle Scholar
  27. Wessels W (2001) The effect of minimum wages on the labor force participation rates of teenagers. Employment Policies Institute paperGoogle Scholar
  28. Williams N, Mills JA (2001) The minimum wage and teenage employment: evidence from time series. Applied Economics 33(3):285–300CrossRefGoogle Scholar
  29. Yaniv G (1994) Complaining about noncompliance with the minimum wage law. Int Rev Law Econ 14(3):351–362CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.RTI InternationalWalthamUSA
  2. 2.North Carolina State UniversityRaleighUSA

Personalised recommendations