Minimum Wages and Youth Employment in France and the United States

51 Pages Posted: 21 Jul 1998 Last revised: 6 Oct 2010

See all articles by John M. Abowd

John M. Abowd

U.S. Census Bureau; Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; NBER (on leave); CREST; IZA Institute of Labor Economics

Francis Kramarz

Independent

Thomas Lemieux

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

David N. Margolis

Centre d'Economie de la Sorbonne; IZA Institute of Labor Economics; World Bank - Social Protection Unit (HDNSP); Paris School of Economics (PSE)

Date Written: July 1997

Abstract

We use longitudinal individual wage and employment data for young people in France and the United States to investigate the effect of intertemporal changes in an individual's status vis-...-vis the real minimum wage on employment transition rates. We" find that movements in both French and American real minimum wages are associated with relatively important employment effects in general, and very strong effects on workers employed at the minimum wage. In the French case, albeit imprecisely estimated, a 1% increase in the real minimum wage decreases the employment probability of a young man currently employed at the minimum wage by 2.5%. In the United States, a decrease in the real minimum of 1% increases the probability that a young man employed at the minimum wage came from nonemployment by 2.2%. These effects get worse with age in the United States, and are mitigated by eligibility for special employment promotion contracts in France.

Suggested Citation

Abowd, John Maron and Kramarz, Francis and Lemieux, Thomas and Margolis, David N., Minimum Wages and Youth Employment in France and the United States (July 1997). NBER Working Paper No. w6111, Available at SSRN: https://ssrn.com/abstract=44596

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