Federal Minimum Wage Hikes Do Reduce Teenage Employment: The Time Series Effects of Minimum Wages in the US Revisited

摘要

In 2002 we published a paper in which we used state space time series methods to analyse the teenage employmentu2010federal minimum wage relationship in the US (Bazen and Marimoutou, 2002). The study used quarterly data for the 46 year period running from 1954 to 1999. We detected a small, negative but statistically significant effect of the federal minimum wage on teenage employment, at a time when some studies were casting doubt on the existence of such an effect. In this note we reu2010estimate the original model with a further 16 years of data (up to 2015). We find that the model satisfactorily tracks the path of the teenage employmentu2010population ratio over this 60 year period, and yields a consistently negative and statistically significant effect of minimum wages on teenage employment. The conclusion reached is the same as in the original paper, and the elasticity estimates very similar: federal minimum wage hikes lead to a reduction in teenage employment with a short run elasticity of around u2013 0.13. The estimated long run elasticity of between u2013 0.37 and u2013 0.47 is less stable, but is nevertheless negative and statistically significant.