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Minimum Wage Effects in the Longer Run
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Minimum Wage Effects in the Longer Run

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  • David Neumark

    (Department of Economics, University of California-Irvine)

  • Olena Nizalova

    (Kyiv Economics Institute)

Abstract

Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, diminished education and training, and lower current labor supply because of lower wages. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if initial wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20's, they earn less and perhaps work less the longer they were exposed to a higher minimum wage at younger ages. The adverse longer-run effects of facing high minimum wages at young ages are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate.

Suggested Citation

  • David Neumark & Olena Nizalova, 2006. "Minimum Wage Effects in the Longer Run," Working Papers 050626, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:050626
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    References listed on IDEAS

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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