The recent University of Washington working paper on the Seattle minimum wage, and its finding that low wage workers have seen average pay go down in response to the increases so far, has generated a substantial amount of coverage. The paper adds important insights into the ways a minimum wage increase affects low-wage workers, and is particularly timely as states and cities embark on a series of minimum wage hikes.
Young people are particularly affected by the minimum wage because they have less work experience and limited skills. For many of them, finding employment is about getting a first job and developing tools they need for better opportunities in the future. In recognition of the outsized harm the minimum wage might have on young workers, many European countries, including Denmark, have a lower youth minimum wage. This structure leads to a discontinuity in the minimum wage, as it jumps significantly when a person reaches age 18.
In a recent study, Claus Thustrup Kreiner of the University of Copenhagen, Daniel Reck of the University of California Berkeley, and Peer Ebbeson Skov of Auckland University of Technology used administrative data with quarterly information on wages, hours worked, and employment, which allowed them to examine the effect of this minimum wage discontinuity on a range of metrics.
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