Minimum Wages and Teen Employment: A Spatial Panel Approach

20 Pages Posted: 4 Sep 2011

See all articles by Charlene M. Kalenkoski

Charlene M. Kalenkoski

Texas Tech University

Donald J. Lacombe

West Virginia University - Regional Research Institute

Abstract

The authors employ spatial econometrics techniques and Annual Averages data from the U.S. Bureau of Labor Statistics for 1990-2004 to examine how changes in the minimum wage affect teen employment. Spatial econometrics techniques account for the fact that employment is correlated across states. Such correlation may exist if a change in the minimum wage in a state affects employment not only in its own state but also in other, neighboring states. The authors show that state minimum wages negatively affect teen employment to a larger degree than is found in studies that do not account for this correlation. Their results show a combined direct and indirect effect of minimum wages on teen employment to be -2.1% for a 10% increase in the real effective minimum wage. Ignoring spatial correlation underestimates the magnitude of the effect of minimum wages on teen employment.

Keywords: minimum wage, teen employment, spatial econometrics

JEL Classification: J08, J21, J38, J48, C31

Suggested Citation

Kalenkoski, Charlene M. and Lacombe, Donald J., Minimum Wages and Teen Employment: A Spatial Panel Approach. IZA Discussion Paper No. 5933, Available at SSRN: https://ssrn.com/abstract=1922004

Charlene M. Kalenkoski (Contact Author)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Donald J. Lacombe

West Virginia University - Regional Research Institute ( email )

P.O. Box 6825
Morgantown, WV 26506-6825
United States
1-304-293-8543 (Phone)
1-304-293-6699 (Fax)

HOME PAGE: http://community.wvu.edu/~djl041/

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