Job Market Paper
Under Review: Labour Economics
Abstract: The minimum wage affects both employment and wages and therefore the opportunity cost of anything substituted for employment. Importantly, one such substitution is human capital formation, including college education. A higher minimum wage increases the opportunity cost of college attendance and the earnings of employed students, which may discourage or encourage attendance through substitution or income effects, respectively. To investigate the effects of minimum wage increases on college enrollment and major choice, I focus on recent high school graduates and large increases in effective state minimum wages from 2004 to 2013. All states experience a change in their effective minimum wage during this period, and I focus on the timing and magnitude of these changes to identify effects. In two separate difference-in-differences analyses using ACS and NCES data, I find that increases in effective state minimum wages increase the likelihood of enrolling in college (income effect) but also substantially increase the probability of dropping out before completion (substitution effect). More students initially enroll in college, but after enrollment, the dropout effect takes over, resulting in lower net enrollment. While the dropout effect dominates overall, I find uneven effects across college majors for 4-year colleges, with losses in lower-earning majors (business, education, and psychology), and increases in higher-earning majors (STEM, health, engineering, and biology). This is consistent with the theory that a higher forgone wage makes college enrollment less rational for certain lower-earning majors. \
Working Papers
Under Review: AEJ: Economic Policy
Media References:
The New York Times,
Fordham Institute’s Education Gadfly Podcast, and
WWL New Orleans \
Research In Progress