Many economists have studied how minimum-wage laws affect the teenage
labor market. These researchers compare the changes in the minimum wage over
time with the changes in teenage employment. Although there is some debate
about how much the minimum wage affects employment, the typical study finds
that a 10 percent increase in the minimum wage depresses teenage employment
between 1 and 3 percent. In interpreting this estimate, note that a 10 percent increase
in the minimum wage does not raise the average wage of teenagers by 10
percent. A change in the law does not directly affect those teenagers who are already
paid well above the minimum, and enforcement of minimum-wage laws is
not perfect. Thus, the estimated drop in employment of 1 to 3 percent is significant.