Minimum Wage Effects on School and Work Transitions of Teenagers

Abstract

Minimum wages increase the probability that teenagers leave school to become employed or work more hours, and increase the probability that they leave school and become non-enrolled and non-employed. Minimum wages also increase the probability that lower-wage employed teenagers become non-enrolled and non-employed. This evidence suggests that (1) the competitive model of minimum wage effects is largely correct; and (2) that there are significant enrollment and employment effects associated with minimum wage changes that should be of concern to policy makers.

JEL Classification: J38