Minimum wages and school enrollment of teenagers: a look at the 1990’s

Abstract

Interest in the effects of the minimum wage on teenagers’ school enrollment has grown in recent years. This issue is of increasing importance given recent calls for increasing the minimum wage. Some authors argue that higher minimum wages will hurt teenagers by lowering their school enrollment. In this paper we estimate the effects of higher minimum wages on school enrollment using the Common Core of Data, collected by the US Department of Education. These data cover the entire population of public school students in the United States. Controlling for local labor market conditions and state and year fixed effects we find some evidence that higher minimum wages reduce teen school enrollment in states where students can drop out before the age of 18. This appears to be driven by the grade 9 to grade 10 transition. We find no effects for higher-grade levels or in states where students cannot drop out until they are 18. This suggests that minimum wages may have a substantial effect on teens’ schooling effort in these early grades but also that these unintended effects can be offset by policies that encourage continued school enrollment.