Heterogeneous Firm Responses to Rising Teenage Wages

.  Substantial youth minimum wage changes in New Zealand between 2000 and 2007 raised teenage average wages by 5–10 per cent relative to those for adults. We use Statistics New Zealand's Linked Employer–Employee Database (LEED) to examine whether firms' teenage labour demand responses to t...

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Bibliographic Details
Published in:Labour (Rome, Italy) Italy), 2012-12, Vol.26 (4), p.436-454
Main Authors: Hyslop, Dean R., Maré, David C., Stillman, Steven, Timmins, Jason
Format: Article
Language:English
Subjects:
Adolescents
Adoption of Innovations
Data analysis
Economic theory
Employment
J21
J23
J31
J38
Labor economics
Labor market
Minimum Wage
Minimum wages
New Zealand
Studies
Technological change
Technology adoption
Teenagers
Wage determination
Wages
Wages & salaries
Younger workers
Youth
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Summary:.  Substantial youth minimum wage changes in New Zealand between 2000 and 2007 raised teenage average wages by 5–10 per cent relative to those for adults. We use Statistics New Zealand's Linked Employer–Employee Database (LEED) to examine whether firms' teenage labour demand responses to these changes are greater for firms with higher teenage‐employment share. We find evidence that high teen‐employers reduced their teen employment relative to other firms and had lower survival rates over the period. However, firms that entered the main teen‐employment industries had higher teen‐employment shares than continuing firms. The results are consistent with endogenous technology adoption in response to non‐marginal changes in relative wages.
ISSN:1121-7081
1467-9914
DOI:10.1111/labr.12000