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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 (2017) Do lower minimum wages for young workers raise their employment? Evidence from a Danish discontinuity. CEPR Discussion Paper Series (DP12539). Centre for Economic Policy Research, London, UK.

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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 up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, 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 0.6-1.1.

Item Type: Monograph (Discussion Paper)
Official URL: https://cepr.org/
Additional Information: © 2017 Claus T. Kreiner, Daniel Reck and Peer Ebbesen Skov
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: H - Public Economics > H2 - Taxation, Subsidies, and Revenue
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs
Sets: Departments > Economics
Date Deposited: 25 May 2018 11:17
Last Modified: 04 Jul 2019 23:26
Funders: Economic Policy Research Network, Rockwool Foundation Research Unit, Danish National Research Foundation
URI: http://eprints.lse.ac.uk/id/eprint/88067

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