Minimum Wage Effects on Employment and School Enrollment / David Neumark, William Wascher.

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Neumark, David

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w4679.Publication details: Cambridge, Mass. National Bureau of Economic Research 1994.Description: 1 online resource: illustrations (black and white)Subject(s):

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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.

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Previous	nber w4676 Reverse Engineering the Yield Curve /	nber w4677 A Sticky-Price Manifesto /	nber w4678 International Differences in Male Wage Inequality: Institutions versus Market Forces /	nber w4679 Minimum Wage Effects on Employment and School Enrollment /	nber w4680 The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience /	nber w4681 Policy, Technology Adoption, and Growth /	nber w4682 International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors /	Next

March 1994.

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.