THE EFFECTS OF THE MINIMUM WAGE ON HIGH SCHOOL COMPLETION IN THE UNITED STATES

Abstract

Although many papers have been written on the economic effects of the minimum wage, most studies center around employment effects. Very few studies have been done on the educational effects, and prior work suffers from a host of problems including serial correlation and the conflation of high school with college. This paper attempts to remedy these shortcomings and add new improvements. Using American Community Survey data from the Integrated Public Use Microdata Services and state-year minimum wage data from the Tax Policy Center, this study focuses on the effects of the minimum wage on high school completion in the United States, 1983-2014. I find that a 10% increase in the minimum wage when individuals were 17 is associated with a 0.27% decrease in high school completion for males, but that it has no effect on females. Disaggregating by race, I find a 0.28% decrease in high school completion for white males, but there is no effect on white females. The negative effect on black males is stronger, at 0.74%, but I find no significant effect on black females. The Hispanic community reacts slightly differently, with no effect on males but a positive effect on females. Specifically, a 10% increase in the minimum wage at age 17 increases Hispanic female high school completion by 0.53%.