The purpose of this paper is to examine the effect of minimum wage on the youth employment using panel technique in Iran’s manufacturing industries at the 4-digit aggregation level of ISIC classification, during 2001-2006. There is the controversy surrounding minimum wage because the effects of the introduction and increase of minimum wage may differ greatly depending on the labor market structure. In order to capture the effects which various un-observed labor supply and demand factors may have on the youth employment, The Kaitz Index (as the ratio of the minimum wage to the average wage) has been used in our analysis. The obtained results provide the small but positive effect of minimum wage on youth employment.
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 by 40% at the discontinuity. Employment falls by 33%, and total input of hours decreases by 45%, 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 to 1.1.
Happy Birthday, You're Fired! The Effects of an Age-Dependent Minimum Wage on Youth Employment Flows in the Netherlands
