Causal Impact of State-Level Minimum Wage Increases Between 2015 and 2024 on Employment Rates for Teenagers Aged 16-19 in the United States | RISE Research

This paper estimates the causal effect of state-level minimum wage increases on teenage (ages 16-19) employment in the United States between 2015 and 2024, using roughly 671,000 person-month CPS observations aggregated into a 510-observation state-year panel. The author applies a difference-in-differences design comparing states that raised their minimum wage above the federal floor of $7.25 against states that did not, using four specifications: a naive DiD model, a two-way fixed-effects model, a fixed-effects model adjusting for inflation, and a never-treated control group, supplemented by an event-study breakdown. The two-way fixed-effects estimate indicates that a minimum wage increase raises teen employment by approximately 1.17%, statistically significant at the 5% level, with the fixed-effects model explaining about 91.5% of variation in teen employment. However, the event-study analysis reveals that this average masks important heterogeneity over time: the immediate effect of a minimum wage increase is near zero, but effects turn slightly negative roughly three or more years after implementation, consistent with the idea that employers adjust gradually rather than immediately cutting or adding teen jobs. The findings broadly align with earlier work by Card and Krueger (1994) and Cengiz et al. (2019) showing minimal average employment effects, while the delayed negative pattern echoes Sorkin's (2015) argument about gradual firm adjustment. The author notes an important limitation: a partial parallel-trends violation at event time -2 weakens confidence in the causal interpretation, alongside other constraints such as annual state-level aggregation obscuring industry- or sub-state-level variation, and the inclusion of the COVID-19 period as an imperfectly controlled shock. The paper concludes that minimum wage increases do not have a strong or consistently negative effect on teen employment in the short term, but that policymakers should be attentive to potential delayed adjustment effects.