Minimum Wages and Teenagers' Enrollment-Employment Outcomes: A Multinomial Logit Model

Abstract

This paper tests the hypothesis that the effect of minimum wage legislation on teenagers' education decisions is asymmetrical across family income classes, with the legislation inducing children from low-income families to reduce their levels of schooling and children from higher-income families to increase their educational attainment. We use data from the National Longitudinal Surveys (NLS) and exploit the fact that, although the minimum wage is fixed at a point in time, its value relative to adult wages varies across areas. Multinomial logit models of teenagers' enrollment-employment outcomes are estimated. The hypothesis appears to be confirmed for white teens; however, the evidence for nonwhites is more ambiguous.

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