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Impact of the 2008 Youth Minimum Wage Reform

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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

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 and earnings are conditional on wage and salary employment. Earnings and incomes are in constant (2006) $-values.

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:´┐ŻEstimated impacts of changes in youth minimum wages on wage and salary employment

Table 5A:´┐ŻEstimated 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

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

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

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

Data table for Figures 5

Figure 6: Studying, Unemployment, and Inactivity, by Age group

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

Data table for Figures 6

Figure 7: Benefit receipt, Earnings, and Total income, by Age group

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

Data table for Figures 7

 


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