Dropouts Need Not Apply? The Minimum Wage and Skill Upgrading

We explore whether minimum wage increases result in substitution from lower-skilled to slightly higher-skilled labor. Using 2011–16 American Community Survey (ACS) data, we show that workers employed in low-wage occupations are older and more likely to have a high school diploma following recent sta...

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Bibliographic Details
Published in:Journal of labor economics 2021-01, Vol.39 (S1), p.S107-S149
Main Authors: Clemens, Jeffrey, Kahn, Lisa B., Meer, Jonathan
Format: Article
Language:English
Subjects:
Dropping out
Labor economics
Minimum wage
Occupations
Secondary schools
Workers
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Summary:We explore whether minimum wage increases result in substitution from lower-skilled to slightly higher-skilled labor. Using 2011–16 American Community Survey (ACS) data, we show that workers employed in low-wage occupations are older and more likely to have a high school diploma following recent statutory minimum wage increases. To better understand the role of firms, we examine the Burning Glass vacancy data. We find increases in a high school diploma requirement following minimum wage hikes, consistent with our ACS evidence on stocks of employed workers. We see substantial adjustments to requirements both within and across firms.
ISSN:0734-306X
1537-5307
DOI:10.1086/711490