Discussion Paper 422 'The Young Bunch: Youth Minimum Wages and Labor Market Outcomes'

Table 1 shows the change in both the rate of the age-specific minimum wage relative to the adult minimum wage and the implied increase in the real weekly minimum wage by age-group for both steps of the reform. [...] 9 Table 3 summarizes the real wage distributions of the number of jobs and total hours worked, expressed as the distance from the real minimum wage in e 1 increments, for 20–27-year-olds over the six-month period leading up to the first step of the minimum wage reform (January to June 2017). [...] 3 Empirical approach 3.1 Identifying the impact of the minimum wage To identify the impact of the youth minimum wage on young workers’ employment and earnings, we exploit the increase in the youth minimum wage on July 1, 2017. [...] 22 from moving the jobs that were initially below the new minimum wage to right at the new minimum wage.20 Next, we infer the spillover share of the total wage impact by taking the difference between the actual and ‘no spillover’ wage increase. [...] We assign jobs to e 0.50 wage bins based on the difference between the hourly wage and the age-specific minimum wage effective July 2019, and estimate equation (1) separately for 20–21-year-olds.21 Figure 5 shows the impact of the minimum wage increase for 20–21-year-olds as the six- month averaged change in the number of hours worked in each wage bin, normalized by the average age-specific number.