Journal article

Happy Birthday, You're Fired! Effects of an Age-Dependent Minimum Wage on Youth Employment Flows in the Netherlands

Jan Kabatek

Industrial and Labor Relations Review | SAGE PUBLICATIONS INC | Published : 2020

Abstract

The Dutch minimum wage for workers aged 15 to 23 is defined as a stepwise increasing function of a worker’s calendar age. Using Dutch administrative records, the author shows that the birthday discontinuities of age-dependent minimum wage rates affect both labor market entry (job accessions) and labor market exit (job separations) of minimum wage workers. The job separations spike in the three months that precede workers’ birthdays, suggesting that firms are dismissing workers whose costs are about to go up. The frequency of job accessions increases immediately after the birthdays and the increase is sustained throughout the following months. The resulting effect on employment levels is dyna..

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Grants

Funding Acknowledgements

I gratefully acknowledge funding from the Australian Research Council Centre of Excellence for Children and Families over the Life Course. I have benefited from comments by Nicole Bosch, Richard Burkhauser, Deborah Cobb-Clark, Arindrajit Dube, David Neumark, Jan van Ours, Andreas Peichl, Yuri Rhodenborgh, David Ribar, Jan Tilly, Arthur van Soest, and seminar participants at DIW Berlin, Dutch Bureau of Policy Analysis, Dutch Ministry of Social Affairs and Employment, Goethe University Frankfurt, IAB Minimum Wage Conference, Tilburg University, University of Groningen, University of Sydney, and ZEW Mannheim. An Online Appendix is available at http://journals.sagepub.com/doi/suppl/10.1177/0019793919897914. This article draws on proprietary data provided by Statistics Netherlands. Researchers who obtain access to the data sets of Statistics Netherlands will be able to replicate all findings. Additional results and copies of the computer programs used to generate the results presented in the article are available from the author at j.kabatek@unimelb.edu.au.