The Economics Of The Minimum Wage On Teenagers

Charlene Kalenkoski and Donald Lacombe, both Associate Professors of Economics at Ohio University, have a new paper on the effects of the minimum wage on teenagers. They write:

Abstract:The relationship between minimum wage increases and youth employment is investigated using county-level data and spatial econometric techniques. Results that account for spatial correlation indicate that a 10% increase in the effective minimum wage is associated with a 3.2% decrease in youth employment, a result that is 28% higher than the corresponding estimate that does not control for spatial correlation. Thus, estimates that do not take into account spatial correlation may significantly underestimate the negative effect of the minimum wage on teenage employment. Improperly controlling for factors that vary systematically over space can lead to incorrect inferences and misinform policy.

This is of course similar to the affects the minimum wage has on Blacks, see here.

Link via Market Power.

2 Responses to “The Economics Of The Minimum Wage On Teenagers”

  1. TacoSam says:

    HP, can you please translate that paragraph into Plain English?

  2. It basically says that for every 10% increase in the minimum wage you get a 3.2% increase in teenage unemployment. Just as economic theory would predict – the more expensive you make something, the less of that you get.

    Notice the important thing here: the minimum wage harms those most who it is designed to help. Whether it is teenagers or black youth, it seems that those at the bottom are always worse off under higher minimum wages.

    For more on this see this post I wrote, The Minority Case Against The Minimum Wage. Click Here.

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