Minimum Wage Increases Are Reducing Jobs for Teens | Economics21

The reasons for this decline matter, both to our understanding and to the welfare of the individuals involved.  If the work decline has occurred simply because teens and their families are correctly calculating that they are better off staying in school without simultaneously holding a job, then the trend might be benign.  If so, we might expect these individuals to add to their long-term earnings potential by delaying their entry into the job market.  But if instead the decline has occurred because it is getting harder for teenagers to find work they would otherwise benefit from, that is a problem warranting solution.

The Neumark-Shupe study examined various possible causes of the decline in teenage work since 2000.  One was whether legislated minimum wage increases were effectively pricing more teenagers (who have comparatively less job experience and fewer established skills) out of the job market.  Another candidate explanation was increased competition from immigrants filling low-skill and entry-level jobs that might otherwise have gone to native-born teenagers.  A third possible explanation was an increased return on education, informing a rational decision by teens to choose the long-term benefits of more time at school over the near-term benefits of employment.

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Minimum Wage Increases Are Reducing Jobs for Teens | Economics21.