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The impact of age-specific minimum wages on youth employment and education: a regression discontinuity analysis

Meltem Dayioglu (Department of Economics, Middle East Technical University, Ankara, Turkey)
Müşerref Küçükbayrak (Central Bank of the Republic of Turkey, Ankara, Turkey)
Semih Tumen (Department of Economics, TED University, Ankara, Turkey)

International Journal of Manpower

ISSN: 0143-7720

Article publication date: 21 March 2022

Issue publication date: 22 August 2022

701

Abstract

Purpose

Using a regression discontinuity design in tandem with a difference-in-discontinuities analysis, the study finds that increasing the minimum wage reduces the employment probability of young males by 2.5–3.1 percentage points.

Design/methodology/approach

The authors exploit an age-specific minimum wage rule – which sets a lower minimum wage for workers of age 15 than the adult minimum wage paid to workers of age 16 and above – and its abolition to estimate the causal effect of a minimum wage increase on youth employment and education in Turkey.

Findings

The authors also document that, initially, the minimum wage increase does not lead to a major change in high school enrollment, while the likelihood of transitioning into “neither in employment nor in education and training” (NEET) category notably increases. However, in the medium term, the NEET effect is transitory; school enrollment increases over time and absorbs the negative employment effect.

Originality/value

The authors argue that policy effects have mostly been driven by demand-side forces rather than the supply side.

Keywords

Acknowledgements

The authors thank Hakan Ercan, Nur Asena Caner, Julide Yildirim Ocal, Erol Taymaz, Francesco Pastore, four anonymous reviewers and seminar participants at Bahcesehir University, Middle East Technical University, ERF 26th Annual Conference, and TED University Trade Research Center 2019 Conference for useful comments and suggestions. The views expressed here are of our own and do not necessarily reflect those of the Central Bank of the Republic of Turkey. All errors are the authors’.

Citation

Dayioglu, M., Küçükbayrak, M. and Tumen, S. (2022), "The impact of age-specific minimum wages on youth employment and education: a regression discontinuity analysis", International Journal of Manpower, Vol. 43 No. 6, pp. 1352-1377. https://doi.org/10.1108/IJM-02-2021-0079

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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