The impact of minimum wages on the incentives of education for the youth

Abstract: The purpose of this thesis is to investigate the incentives regarding the education decisions, resulting from a minimum wage over the period 2005-2014. The question is investigated by comparing the changes in the wage dispersion and upper secondary graduation rate in 17 OECD countries. And then, by comparing the changes in the bites of the minimum wage and educational attainment for upper secondary students in 11 OECD countries, where minimum wages are regulated by law. The majority of previous research seem to point out a negative educational effect of minimum wages. However, this paper finds no evidence that increasing the minimum wage can decrease the high school graduation rate. A possible explanation is that the correlation between the higher employment prospect and educational attainment can create incentives for young individuals to undergo education. This study seems to be the first to investigate the educational effects of minimum wages using internationally comparative data.