Minimum wages and the young

Should the minimum wage for teenagers be raised to the adult level? Omar's got a nice debate here and here.
However, the debate overlooks an important point - that the adverse effects of doing so are not confined to the job destruction caused by higher wages.
Imagine the minimum wage for teenagers were raised with no loss of jobs at all. What would happen?
Minimum wage work would become more attractive, relative to studying. At the margin, some teenagers would therefore leave education to get minimum wage jobs.
And some of these would be more attractive to employers than current teenagers - they are, after all, intelligent and educated enough to have started in the sixth form.
So, these teenagers would displace others  from jobs.
Who are these other teenagers? Some would be those with the very worst job prospects - the deeply unskilled, semi-criminals, mentally unstable or those with drug problems. Others would be ethnic minorities; because the supply of teenage workers rises, employers will have more ability to indulge racist preferences.
So, the most vulnerable people suffer.
And how will these make ends meet? At the margin, some will turn to crime. This isn't because there's a criminal culture among the underclass - it's just that rational people turn to crime if it pays.
There's evidence from the US that these effects are significant; see here, here and here (pdf).
So, a minimum wage for teenagers means lower education, worse prospects for the worse off, and more crime - even if it doesn't destroy jobs.
This doesn't mean we shouldn't help teenagers. Just that a minimum wage is a bad way of doing so.

Comments

[dsquared]

This sort of "chained marginal" argument doesn't look like a general equilibrium one to me - you're ignoring the benefit of having better and more productive workers in those jobs.

[Luis Enrique]

but D2, how would taking into account the benefit of having more productive workers in those jobs change any of the points in this post?

[Mark Wadsworth]

S&T, you have answered your own question with your previous post advocating a Citizen's Income. Wouldn't it be nice if people could keep their entire benefit entitlement plus two thirds of their gross wages?

[VS]

I would argue in favour of ending the minimum wage differential. After all, why should someone not get the same rate of pay as their colleagues simply because they are younger?

[Luis Enrique]

"After all, why should someone not get the same rate of pay as their colleagues simply because they are younger?"

Erm ... if doing so leads to "lower education, worse prospects for the worse off" perhaps?

[mat]

VS is correct. While private individuals should be free to discriminate on any basis, the government should treat each citizen equally.

That's why, as much as I hate wealth redistribution, a CBI is preferable to our current welfare system.

[VS]

Luis, but i am not convinced it does lead to lower education and worse prospects for the worse-off. After all, those of the worst-off who are under 22 are earning more.

Additionally, even if some leave school early because of higher wages, that doesn't mean they won't go back into education later on. In fact, some time in the labour force may convince some people who weren't keen on certain subjects at school that learning about (say) computers or engineering has a good workplace use.