Welfare Reform on the Web (January 2009): Minimum Wage - overseas

Effects of minimum wages on youth employment: the importance of accounting for spatial correlations

C.M. Kalenkowski and D.J. Lacombe

Journal of Labor Research, vol. 29, 2008, p. 303-317

The relationship between minimum wage increases and youth employment is investigated using United States county-level data and spatial econometric techniques. Results that account for spatial correlation show that a 10% increase in the effective minimum wage is associated with a 3.2% decrease in youth employment, a result that is 28% higher than the corresponding estimate that does not control for spatial correlation.