Impact of the 2008 Youth Minimum Wage Reform

Tables and Figures

Table 1: Summary of minimum wage changes
Announcement	Effective	Nominal minimum wage affecting			New
Date	Date	Adults (Aged 20+)	18–19 year olds	16–17 year olds	Entrants’ wage
	17 September 1990	6.13	–	–	–
	31 March 1994	–	3.68	3.68	–
	22 March 1995	6.25	3.75	3.75	–
	18 March 1996	6.38	3.83	3.83	–
	1 March 1997	7.00	4.20	4.20	–
	6 March 2000	7.55	4.55	4.55	–
14 December 2000	5 March 2001	7.70	7.70	5.40	–
30 January 2002	18 March 2002	8.00	8.00	6.40	–
19 December 2002	24 March 2003	8.50	8.50	6.80	–
23 February 2004	1 April 2004	9.00	9.00	7.20	–
21 December 2004	21 March 2005	9.50	9.50	7.60	–
21 December 2005	27 March 2006	10.25	10.25	8.20	–
18 December 2006	1 April 2007	11.25	11.25	9.00	–
19 December 2007	1 April 2008	12.00	12.00	12.00	9.60
9 February 2009	1 April 2009	12.50	12.50	12.50	10.00
27 January 2010	1 April 2010	12.75	12.75	12.75	10.20

2007-2008 Change(1)		2.5%	2.5%	28.2%

Notes: (1) Real change, adjusted for increases in the CPI inflation.

Table 2A: Sample characteristics - HLFS quarterly samples
	1986-2010		1997-2010		2004-2010
	Full sample	Workers	Full sample	Workers	Full sample	Workers
Age	18.5	18.7	18.4	18.7	18.4	18.7
	(0.003)	(0.004)	(0.004)	(0.006)	(0.006)	(0.008)
Female	0.495	0.481	0.490	0.477	0.490	0.475
	(0.001)	(0.001)	(0.001)	(0.002)	(0.002)	(0.002)
Married	0.083	0.090	0.084	0.095	0.088	0.101
	(0.000)	(0.001)	(0.001)	(0.001)	(0.001)	(0.002)
NZ born	0.819	0.860	0.814	0.866	0.794	0.846
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.002)
Pakeha	0.503	0.559	0.612	0.714	0.589	0.693
	(0.001)	(0.001)	(0.001)	(0.002)	(0.002)	(0.002)
Maori	0.147	0.111	0.190	0.156	0.193	0.159
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.002)
Pacific Islander	0.054	0.037	0.073	0.053	0.075	0.053
	(0.000)	(0.000)	(0.001)	(0.001)	(0.001)	(0.001)
Asian	0.053	0.030	0.082	0.049	0.099	0.065
	(0.000)	(0.000)	(0.001)	(0.001)	(0.001)	(0.001)
Wage & salary worker	0.543	1	0.527	1	0.528	1
	(0.001)		(0.001)		(0.002)
Weekly hours	28.2	28.2	26.4	26.4	26.2	26.2
	(0.041)	(0.041)	(0.059)	(0.059)	(0.085)	(0.085)
Self employed	0.010	0.000	0.008	0.000	0.007	0.000
	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)
Studied (standard Qs)	0.252	0	0.281	0	0.288	0
	(0.001)		(0.001)		(0.002)
Studied (all sources)					0.609	0.490
					(0.002)	(0.002)
Unemployed	0.095	0	0.088	0	0.085	0
	(0.001)		(0.001)		(0.001)
Inactive (standard Qs)	0.190	0	0.180	0	0.173	0
	(0.001)		(0.001)		(0.001)
Inactive (all sources)					0.116	0
					(0.001)

No. Observations	328,110	173,563	161,719	83,469	77,198	40,032

Notes: Samples are restricted to individuals aged 16-21 years. Estimated standard errors are in parentheses. All summary statistics are weighted by the HLFS sampling weights. Hours worked are conditional on wage and salary employment.

Table 2B: Sample characteristics - HLFS-IS annual samples
	1997-2010		2004-2010
	Full sample	Workers	Full sample	Workers
Age	18.4	18.7	18.4	18.7
	(0.009)	(0.012)	(0.012)	(0.017)
Female	0.490	0.478	0.491	0.474
	(0.003)	(0.004)	(0.004)	(0.005)
Married	0.082	0.093	0.086	0.099
	(0.001)	(0.002)	(0.002)	(0.003)
NZ born	0.811	0.865	0.792	0.845
	(0.002)	(0.002)	(0.003)	(0.004)
Pakeha	0.611	0.711	0.586	0.691
	(0.002)	(0.003)	(0.004)	(0.005)
Maori	0.189	0.157	0.193	0.158
	(0.002)	(0.003)	(0.003)	(0.004)
Pacific Islander	0.072	0.051	0.074	0.051
	(0.001)	(0.002)	(0.002)	(0.002)
Asian	0.083	0.052	0.098	0.068
	(0.001)	(0.002)	(0.002)	(0.003)
Wage & salary worker	0.514	1	0.516	1
	(0.003)		(0.004)
Weekly hours	25.7	25.7	25.5	25.5
	(0.119)	(0.119)	(0.168)	(0.168)
Self employed	0.007	0.000	0.006	0.000
	(0.000)	(0.000)	(0.001)	(0.000)
Studying (incl student bens)	0.473	0.250	0.476	0.251
	(0.003)	(0.003)	(0.004)	(0.004)
Unemployed	0.086	0	0.084	0
	(0.001)		(0.002)
Inactive (incl student bens)	0.133	0	0.130	0
	(0.002)		(0.002)
Received benefits	0.110	0.040	0.095	0.033
	(0.002)	(0.001)	(0.002)	(0.002)
Real hourly wage		11.89		12.42
		(0.048)		(0.052)
Real weekly earnings		334.6		349.6
		(1.8)		(2.6)
Real total weekly income	213.0	352.1	218.3	366.2
	(1.2)	(1.7)	(1.8)	(2.5)

No. Observations	38,885	19,577	19,173	9,719

Table 3 : Difference-in-differences’ estimates of Employment and Hours worked impacts
	Age group			Difference (16-17 from)
	16-17	18-19	20-21	18-19	20-21
	(1)	(2)	(3)	(4)	(5)
(A) Wage and salary employment
1. Before (2006Q1 - 2007Q4)	0.449	0.604	0.644	-0.154	-0.195
	(0.007)	(0.008)	(0.010)	(0.010)	(0.012)
	[8,725]	[6,853]	[6,398]
2. After (2008Q2 - 2010Q1)	0.376	0.557	0.599	-0.181	-0.223
	(0.006)	(0.008)	(0.008)	(0.010)	(0.010)
	[9,419]	[7,805]	[7,149]
3. Difference (After-Before)	-0.074	-0.047	-0.045	-0.027	-0.028
	(0.009)	(0.011)	(0.013)	(0.014)	(0.016)
(B) Main-job Actual Hours worked
1. Before (2006Q1 - 2007Q4)	18.77	29.32	31.31	-10.55	-12.55
	(0.31)	(0.28)	(0.31)	(0.41)	(0.44)
	[3,910]	[4,069]	[4,126]
2. After (2008Q2 - 2010Q1)	15.79	26.23	29.36	-10.44	-13.57
	(0.29)	(0.37)	(0.37)	(0.47)	(0.47)
	[3,534]	[4,160]	[4,208]
3. Difference (After-Before)	-2.98	-3.09	-1.96	0.11	-1.03
	(0.42)	(0.46)	(0.49)	(0.63)	(0.65)

Notes: Estimated standard errors are in parentheses, and number of observations are in square brackets. The numbers in bold are the difference-in-differences estimates of the impact of the abolition of the youth minimum wage on 16-17 year-olds employment and hours worked.

Table 4:�Estimated impacts of changes in youth minimum wages on wage and salary employment

Table 5A:�Estimated impacts of changes in youth minimum wages on other HLFS quarterly outcomes

Table 5B: Estimated impacts of changes in youth minimum wages on other HLFS quarterly outcomes

Table 6: Effects on mutually exclusive employment, study & inactivity
	Wage & Salary Employed (1)	Study (All Sources) (2)	Mutually exclusive & exhaustive outcomes
	Wage & Salary Employed (1)	Study (All Sources) (2)	Work Only (3)	Work & Study (4)	Study Only (5)	Inactive (6)
A: Controlling for Age-specific seasonal factors
age16_17
2008	0.0206	-0.0163	0.0365*	-0.0191	0.0026	-0.0200**
	(0.017)	(0.016)	(0.014)	(0.014)	(0.019)	(0.006)
2009	-0.0264	0.0013	0.0309*	-0.0524**	0.0534**	-0.0319**
	(0.018)	(0.011)	(0.012)	(0.015)	(0.020)	(0.008)
2010	-0.0483*	0.0313**	0.0116	-0.0581**	0.0891**	-0.0426**
	(0.020)	(0.012)	(0.013)	(0.016)	(0.019)	(0.008)
age18_19
2008	0.0401*	-0.0045	0.0056	0.0243+	-0.0290+	-0.0009
	(0.018)	(0.019)	(0.018)	(0.012)	(0.017)	(0.007)
2009	-0.0130	0.0069	0.0022	-0.0145	0.0210	-0.0086
	(0.014)	(0.011)	(0.015)	(0.012)	(0.014)	(0.008)
2010	0.0062	0.0295*	-0.0285*	0.0318+	-0.0027	-0.0006
	(0.019)	(0.014)	(0.014)	(0.018)	(0.014)	(0.007)
R-squared	0.12	0.21	0.14	0.06	0.18	0.08
B: Controlling for Age-specific business cycle factors
age16_17
2008	0.0262	-0.0196	0.0395**	-0.0159	-0.0040	-0.0196**
	(0.017)	(0.016)	(0.014)	(0.014)	(0.018)	(0.005)
2009	0.0279	-0.0190	0.0339+	0.0040	-0.0234	-0.0145
	(0.026)	(0.018)	(0.018)	(0.023)	(0.026)	(0.010)
2010	0.0127	0.0086	0.0162	0.0042	0.0039	-0.0243*
	(0.030)	(0.021)	(0.021)	(0.025)	(0.028)	(0.010)
age18_19
2008	0.0406*	-0.0053	0.0094	0.0209+	-0.0265+	-0.0038
	(0.017)	(0.019)	(0.018)	(0.012)	(0.016)	(0.007)
2009	0.0164	-0.0054	0.0236	-0.0052	-0.0008	-0.0177+
	(0.013)	(0.016)	(0.017)	(0.018)	(0.014)	(0.009)
2010	0.0424*	0.0138	-0.0032	0.0447*	-0.0312+	-0.0103
	(0.019)	(0.021)	(0.021)	(0.022)	(0.017)	(0.010)
R-squared	0.12	0.21	0.14	0.06	0.18	0.08
Observations	77101	77101	77101	77101	77101	77101

Notes: Huber-White standard errors, that allow for arbitrary correlation in individual errors within age-quarter cells, are in parentheses; coefficients followed by +, *, and ** are significantly different from zero at the 10%, 5% and 1% level respectively. All specifications are estimated by OLS over the sample period 2004-2010, and include the same set of control variables, including age-specific quarterly seasonal effects (panel A), and age-specific business cycle effects (panel B), as in the specifications in Table 4, columns (7) and (8).

Table 7: Estimated impacts of changes on HLFS-IS annual outcomes
	Received	Log (weekly	Log (weekly
	Benefits	earnings)	income)
A: Controlling for age-specific and year-specific factors
age16_17
2008	-0.022	0.0073	0.0441
	(0.015)	(0.052)	(0.077)
2009	-0.0172+	-0.164**	-0.0445
	(0.009)	(0.040)	(0.047)
2010	-0.0364*	0.0934+	-0.0662+
	(0.014)	(0.051)	(0.035)
age18_19
2008	-0.0261	-0.0265	0.0768
	(0.018)	(0.035)	(0.073)
2009	-0.0177+	-0.117**	-0.0087
	(0.010)	(0.042)	(0.046)
2010	-0.0144	-0.144*	0.0164
	(0.009)	(0.059)	(0.034)
R-squared	0.11	0.32	0.29

B: Controlling for Age-specific business cycle factors
age16_17
2008	-0.0221+	0.0054	0.045
	(0.013)	(0.051)	(0.065)
2009	-0.0098	-0.084	0.0096
	(0.012)	(0.054)	(0.048)
2010	-0.0232	0.230**	0.0177
	(0.021)	(0.070)	(0.053)
age18_19
2008	-0.0243	-0.0287	0.0765
	(0.015)	(0.039)	(0.066)
2009	-0.0087	-0.0661	0.0201
	(0.013)	(0.052)	(0.047)
2010	-0.0033	-0.0581	0.0617
	(0.020)	(0.072)	(0.053)
R-squared	0.11	0.33	0.29
Observations	36,764	18,169	36,764

Figure 1: Real minimum wage (2006 $s), by Age group

Notes: Vertical lines correspond to dates of the 2001, 2002, and 2008 youth minimum wage reforms.

Data table for Figure 1

Figures 2: 16-17 year-old wage trends

Data table for Figures 2

Figure 3: Real wages (2006$s) and the minimum wage, by Age group

Notes: Vertical lines correspond to dates of the 2001, 2002, and 2008 youth minimum wage reforms.

Data table for Figures 3

Figure 4: Hourly wage distributions (2006$s), by Age group

Notes: Vertical lines in (a) at 2006 youth minimum, and 2008 new entrants and adult minimum wages; in (b) and (c) at 2006 and 2008 adult minimum wages.

Data table for Figures 4

Figure 5: Employment and hours worked, by Age group