Working Papers
The Impact of Age-Specific Minimum Wages on Youth Employment and Education: A Regression Discontinuity Analysis
No.
1431
Publisher
ERF
Date
December, 2020
Topic
J3. Wages, Compensation, and Labor Costs
J2. Demand and Supply of Labor
We exploit the age-specific minimum wage rule—which sets a lower minimum wage for workers of age 15 than that for workers of age 16 and above—to estimate its effects on youth employment and education in Turkey. Using a regression discontinuity approach, we find that youth minimum wage policy substantially reduced employment probabilities of young males. In terms of magnitudes, the employment probability declined by 2.5-3.1 percentage points at 16-year-old age cut-off. Due to the policy, probability of unemployment increased around 2 percentage points. Our findings also suggest that the policy change increased high school enrollment among young males. We conjecture that the effects of the policy have mostly been driven by the demand-side forces rather than the supply side.
Research Fellows
Meltem Dayioglu Tayfur
Professor, Department of Economics, Middle East Technical...
Research Associates
Müşerref Küçükbayrak
Economist, Structural Economic Research Department, Central Bank...
Research Fellows
Semih Tumen
Professor of Economics, TED University, Turkey