Working Paper: NBER ID: w10656
Authors: David Neumark; Olena Nizalova
Abstract: Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, lower current labor supply because of lower wages, and diminished training and skill acquisition. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if short-term wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20's, they work less and earn less the longer they were exposed to a higher minimum wage, especially as a teenager. The adverse longer-run effects of facing high minimum wages as a teenager are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate.
Keywords: No keywords provided
JEL Codes: J2; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exposure to high minimum wages during critical early labor market years (F66) | adverse long-run effects (E44) |
| reduced training (M53) | adverse long-run effects (E44) |
| labor market experience (J29) | adverse long-run effects (E44) |
| schooling (I21) | adverse long-run effects (E44) |
| exposure to higher minimum wages during teenage years (J38) | labor market outcomes into adulthood (J49) |
| higher minimum wage as teenagers (J38) | earn less and work less in late 20s (J26) |
| longer exposure to higher minimum wages (J38) | more pronounced negative effects on wages and employment (F66) |
| adverse effects are particularly strong among black individuals (J15) | differential impact of minimum wage policies (J38) |
| early exposure to high minimum wages (J38) | lasting detrimental effects on wages, employment, and hours worked (J38) |