Spatial Heterogeneity And Minimum Wages: Employment Estimates For Teens Using Cross-State Commuting Zones

Date Added: Jun 2009
Format: PDF

Conventional approaches to estimating the effect of minimum wages on teen employment insufficiently account for heterogeneous employment patterns and selectivity of states with higher minimum wages. The authors overcome this problem by using policy discontinuities at state borders. The estimates from cross-state labor markets (commuting zones) using data from the Census and the American Community Survey show that the measured negative impacts on teen employment in traditional estimates are driven by insufficient controls for spatial heterogeneity.