Causal Impact of State-Level Minimum Wage Increases Between 2015 and 2024 on Employment Rates for Teenagers Aged 16–19 in the United States
Ayush Deshpande
21/07/2026
This study estimates the causal effect of state-level minimum wage increases on the teen employment rate from 2015 to 2024. Using approximately 671,000 person-month CPS observations, I applied a difference-in-differences (DiD) design that compared states which raised their minimum wage above the federal floor value of $7.25 as opposed to states that did not.
Several specifications were used in this study: a simple DiD model, a two-way fixed-effects DiD model, a fixed-effects model which accounted for inflation adjusted minimum wage, and a never-treated control group. An event study is also used to see how the effect of a minimum wage increase evolves year by year, as opposed to one averaged number.
The two-way fixed-effects model explains around 91.5% of the variation in teen employment and produces a statistically significant pooled value of +1.17%. However, the event study reveals that this positive average hides underlying effects. The effect is near zero in the first couple of years, and then shifts to slightly negative three or more years after the minimum wage increase. The pooled coefficient is better understood not as evidence of a positive employment effect, but as evidence that a minimum-wage increase did not produce a very large disemployment effect immediately.
The results line up with past works on minimum wage. Even so, a partial parallel-trends violation at event time -2 weakens the strength of the causal interpretation, since the event study detects a pre-treatment deviation that that pooled linear trend test does not.