Tuesday 28 June 2011

A mild clarification

I like the ACT Party's campaign to reinstate a lower youth minimum wage. Their ad over the weekend cited some of my numbers, though, and I'd want a footnote on there. They write:
Economist Eric Crampton estimates that Labour's abolition of the youth wage has cost 12,350 young people jobs.
I'd be more comfortable saying that the abolition of the youth wage has most likely cost between eight and twelve thousand jobs. The numbers since mid 2009 have ranged from about seven thousand to about thirteen thousand more kids unemployed than we'd expect given the adult unemployment rate. 12,350 is the number that drops out of the last quarter, but StatsNZ warned about data problems with that quarter's HLFS given data collection problems in Canterbury.

The "most likely" matters too as I don't have a design that allows for strong causal statements. I'd put 20:1 that youth minimum wage increases are to blame for current excess youth unemployment, but it's always possible that something else did it. Something else that affected kids (and not adults) and that hit with the right timing and that has a good body of theory predicting such an effect and that would have been large enough to have had that effect. I can't think of what else meets the bill, but maybe I'm unimaginative.


  1. From my untutored pov any legislation for young people has to consider the effect of social media.

    On Facebook, Twitter or by text tens of thousands of school leavers will be communicating with each other on their success or not of their attempts to get jobs.

    If they communicate that the prospective boss said they were unskilled, too young or too expensive.. then that can go out to thousands and create a depressant effect.

    It doesn't matter whether its the truth or not.. its what goes out to other insecure youngsters.


  2. I appreciate your carefulness Eric.