Minimum Wages and Teen Employment: A Spatial Panel Approach

Charlene Kalenkoski and Donald J. Lacombe ()
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Donald J. Lacombe: West Virginia University

No 5933, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: spatial econometrics; teen employment; minimum wage (search for similar items in EconPapers)
JEL-codes: C31 J08 J21 J38 J48 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2011-08
New Economics Papers: this item is included in nep-geo, nep-lab, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published in: Papers in Regional Science, 2013, 92 (2), 407-417

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Related works:
Journal Article: Minimum wages and teen employment: A spatial panel approach (2013)
Working Paper: Minimum Wages and Teen Employment: A Spatial Panel Approach (2011)
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