The impact of a minimum wage increase on employment and school enrollment: evidence from Turkey

In 2004 minimum wage raised by 24.3% in Turkey. The effect of this increase on teenage school enrollment rates is highly debatable. We use TurkStat's Household Budget Surveys and nonlinear difference-in-difference
and difference-in-difference-in-difference estimation approaches to evaluate the impact of the 2004 minimum wage change on male teenage employment and school enrollment rates in urban Turkey. We use regional variation in the share of minimum wage earners in wage employment to determine low- and high-impact regions. Treatment and control groups are then selected among these by further comparing the school enrollment rates prior to the change. We find that the increase in the minimum wage in 2004 has encouraged young men to enroll in schooling and reduce their labor supply.