YOUTH MINIMUM-WAGE RATES - THE DUTCH EXPERIENCE

Legal minimum wage rates for young workers were introduced in The Netherlands in 1974. After substantial increases during the 1970s, youth minimum wages were lowered in the 1980s, in response to the large increase of youth unemployment. Analyses the employment effects of lowering youth minimum wages. Looks at macro and micro evidence. At the macro level, does not find convincing evidence of negative effects of youth minimum wages on youth employment. Constructs a micro model in which an individual's labour market state can be affected by the sign of potential earnings minus the relevant minimum wage. The model is estimated with data from 1984 and 1987. Finds significant minimum wage elasticities of employment and unemployment, with expected signs.