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.

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