tag:blogger.com,1999:blog-2830084253401570472.post9009015692381718597..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: ChutzpahEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2830084253401570472.post-20799885564045188362011-01-12T17:39:14.026+13:002011-01-12T17:39:14.026+13:00Great, thanks for the information, very fascinatin...Great, thanks for the information, very fascinating.<br /><br />Hopefully I'll see you in your economics and policy course. <br /><br />Nathan.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-88951935345510209402011-01-12T12:00:21.730+13:002011-01-12T12:00:21.730+13:00And note that the "roughly half" was pic...And note that the "roughly half" was picking the set of comparable coefficients that seemed to yield the biggest substitution effect.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-64878662896886670432011-01-12T11:59:23.856+13:002011-01-12T11:59:23.856+13:00Neumark and Washer, 1992, "Employment Effects...Neumark and Washer, 1992, <a href="http://www.jstor.org/stable/2524738?origin=JSTOR-pdf" rel="nofollow">"Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws."</a><br /><br />The employment effects on youths of a youth subminimum wage is twice as large and in the opposite direction as the effects on employment of 20-24 year olds. So in that study, roughly half of the benefits to young workers are substitution away from older workers; the other half will be increased job creation. Compare results from tables 7 and 8. <br /><br />But statistical significance is a big problem. Joint significance is rejected in all cases for effects on older workers: in other words, we can't reject that there's no effect at all. For younger workers, the effects approach conventional significance in most cases (and are significant in others).Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-10708673525360809092011-01-12T11:28:31.183+13:002011-01-12T11:28:31.183+13:00A very good question to which I haven't the an...A very good question to which I haven't the answer. What we'd need is the cross price elasticity of demand for adult workers with changes in young workers' wages around the minimum. It would be tough to estimate because where there are differential youth minimum wages, they usually move in parallel with changes in the adult minimum wage. Most of what we know about the effects of minimum wages on youths is from studies of changes in an overall minimum wage that affects both youths and adults.<br /><br />It's likely that there would be some substitution of youth for low-skilled adult workers with the reintroduction of a lower youth minimum wage. Overall employment would increase - some jobs that weren't worth doing at $12.75 an hour would be worth doing at $10. <br /><br />I'd love to see a study that quantified the substitution effects. I'd be surprised if there were much in the way of firing low skilled adults and hiring youths, but I'd not be surprised to see more newly created jobs going to youths rather than low-skilled adults (with more total jobs being created).Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-28304753963819277242011-01-11T23:35:13.877+13:002011-01-11T23:35:13.877+13:00As an economic layman, I have a question regarding...As an economic layman, I have a question regarding youth rates. Suppose youth rates are reintroduced, and naturally youth unemployment falls. Is there any data on what kind of affect this has on the adult unemployment rate? I.e. does the increase in firms hiring younger workers correspond with less employment of adult workers? Does the adult unemployment rate increase at all, significantly? Or perhaps firms simply hire more people, since they can employ more young workers than previously with the same costs, and it's not really as zero-sum as it might intuitively seem.<br /><br />Thanks for any thoughts.Anonymousnoreply@blogger.com