Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment and Unemployment

Abstract

While previous time series studies have quite consistently found that the minimum wage reduces teenage employment, the extent of this reduction is much less certain. Moreover, because few previous studies report results of more than one specification, the causes of differences in estimated impacts are not well understood. Less consensus is evident on the effect of the minimum wage on teenage unemployment, or its relative impact on black and white teenagers. The purpose of this paper is both to update earlier work and to analyze the sensitivity of estimated minimum wage effects to alternative specification choices. In addition to providing estimates of the effect of minimum wage increases on aggregate employment and unemployment rates of teenagers, we explore several related issues: the relative importance of changing the level and coverage of the minimum wage; the timing of responses to a change in the minimum; effects on part-time and full-time work; effects on young adults (age 20-24).