Minimum Wages and Employment: Reconsidering the Use of a Time-Series Approach as an Evaluation Tool

37 Pages Posted: 15 Feb 2010

Abstract

The time-series approach used in the minimum wage literature essentially aims to estimate a treatment effect of increasing the minimum wage. In this paper, we employ a novel approach based on aggregate time-series data that allows us to determine if minimum wage changes have significant effects on employment. This involves the use of tests for structural breaks as a device for identifying discontinuities in the data which potentially represent treatment effects. In an application based on Australian data, the tentative conclusion is that the introduction of minimum wage legislation in Australia in 1997 and subsequent minimum wage increases appear not to have had any significant negative employment effects for teenagers.

Keywords: minimum wage, teenage employment, structural break

JEL Classification: C22, J3

Suggested Citation

Lee, Wang-Sheng and Suardi, Sandy, Minimum Wages and Employment: Reconsidering the Use of a Time-Series Approach as an Evaluation Tool. IZA Discussion Paper No. 4748, Available at SSRN: https://ssrn.com/abstract=1552682 or http://dx.doi.org/10.2139/ssrn.1552682

Wang-Sheng Lee (Contact Author)

Monash University ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia

Sandy Suardi

La Trobe University ( email )

School of Economics and Finance
Bundoora, 3086
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
47
Abstract Views
696
PlumX Metrics