Do Minimum Wages Reduce Educational Attainment?
Economic theory predicts that the effect of minimum wages on school enrollment is ambiguous.(19) That is, a higher minimum wage makes employment more attractive and school less attractive, causing some teens to seek employment and/or drop out of school. A number of empirical studies have advanced the literature by examining the effects of minimum wages on the school enrollment status of teenagers.(20) Minimum wage opponents contend that it decreases teen employment and prompts at-risk teens to drop out of school. For example, Neumark and Wascher’s estimates suggest that President Clinton’s proposed minimum wage hike would lower school enrollment by 2.8 percentage points. However, their study used an inaccurate measure of school enrollment, misclassifying some students as nonstudents. As a result, Neumark and Wascher overestimated the adverse effects minimum wages have on school enrollment.(21) Evans and Turner (1995), using an accurate measure of school enrollment but otherwise identic
