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Do lower minimum wages for young workers raise their employment? Evidence from a Danish discontinuity

Kreiner, Claus Thustrup, Reck, Daniel and Skov, Peer Ebbesen (2020) Do lower minimum wages for young workers raise their employment? Evidence from a Danish discontinuity. Review of Economics and Statistics, 102 (2). 339 - 354. ISSN 0034-6535

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Identification Number: 10.1162/rest_a_00825

Abstract

We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps by 40% at the discontinuity. Employment falls by 33%, and total input of hours decreases by 45%, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6 to 1.1.

Item Type: Article
Official URL: https://www.mitpressjournals.org/loi/rest
Additional Information: © 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J20 - General
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General
Date Deposited: 06 Jun 2019 09:27
Last Modified: 30 Jun 2020 07:56
URI: http://eprints.lse.ac.uk/id/eprint/100800

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