NZI on Youth Unemployment

From their latest report:

Many young people are leaving school but are not finding their way into
permanent work, resulting in high levels of unemployment. Part of the problem is that many youth have become disengaged at school, failed to become well qualified and so are not competing successfully with older workers. The problem is especially acute now that jobs are less available than they were prior to the recession.

A case has been made that removal of the youth minimum wage just as the recession began has reduced the competitiveness of our youth as job applicants, contributing to the youth unemployment increase (Crampton, 2011; Douglas, 2011). New Zealand has had high youth unemployment relative to adult unemployment for a long time though, so removal of the youth minimum wage is not the source of the problem, though it may have exacerbated the situation recently.

The eight countries in the OECD (2010d, pp.103-104) with a youth minimum wage do have lower youth unemployment, on average, than the countries without a youth minimum wage but there are many countries that have low youth unemployment and no youth minimum wage.

I'd be willing to bet that the ones seeing no particular harms on young workers are also the ones where the effective minimum wage is low relative to the average wage. Where the constraint doesn't bind...

And, as careful readers will recall, I've never made the claim that abolishing the differential lower youth minimum wage caused all of the ramp-up in youth unemployment: maybe 8 points of the current 27.5% youth unemployment rate could be due to the change.

But I'm glad that folks other than me are starting to think that maybe, just maybe, forcing employers to pay a 16 year old $13/hr was a rather bad idea.