The impact of age-specific minimum wages on youth employment and education: a regression discontinuity analysis

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DAYIOĞLU TAYFUR M., Kucukbayrak M., Tümen S.

INTERNATIONAL JOURNAL OF MANPOWER, vol.43, no.6, pp.1352-1377, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 43 Issue: 6
  • Publication Date: 2022
  • Doi Number: 10.1108/ijm-02-2021-0079
  • Journal Name: INTERNATIONAL JOURNAL OF MANPOWER
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Educational research abstracts (ERA), INSPEC, vLex
  • Page Numbers: pp.1352-1377
  • Keywords: Age-specific minimum wages, Youth employment, Education, Regression discontinuity design, J21, J24, J31, J38, SCHOOL, GUIDE, RATES
  • TED University Affiliated: Yes

Abstract

Purpose Using a regression discontinuity design in tandem with a difference-in-discontinuities analysis, the study finds that increasing the minimum wage reduces the employment probability of young males by 2.5-3.1 percentage points. Design/methodology/approach The authors exploit an age-specific minimum wage rule - which sets a lower minimum wage for workers of age 15 than the adult minimum wage paid to workers of age 16 and above - and its abolition to estimate the causal effect of a minimum wage increase on youth employment and education in Turkey. Findings The authors also document that, initially, the minimum wage increase does not lead to a major change in high school enrollment, while the likelihood of transitioning into "neither in employment nor in education and training" (NEET) category notably increases. However, in the medium term, the NEET effect is transitory; school enrollment increases over time and absorbs the negative employment effect. Originality/value The authors argue that policy effects have mostly been driven by demand-side forces rather than the supply side.