The imposition of a national wage standard sets up a useful natural
experiment in which the "treatment effect" varies across states depending
on the fraction of workers earning less than the new minimum. I use this
idea to evaluate the effect of the April 1990 increase in the Federal
minimum wage on teenage wages, employment, and school enrollment.
Interstate variation in teenage wages was high at the end of the 1980s, in
part because 16 states had enacted state-specific minimums above the
prevailing Federal rate. Comparisons of grouped and individual state data
confirm that the rise in the minimum wage significantly increased teenage
wages. There is no evidence of corresponding losses in teenage employment
or changes in teenage school enrollment.