Youth wages and employment

This study focuses on youth employment, in particular, the factors influencing the demand for youth workers and the interaction between youth and adult employment. Its purpose is to examine the determinants of youth employment in order to identify the possible implications of replacing junior rates of pay in State and Federal awards with non-discriminatory alternatives. The study uses econometric analysis of a large cross sectional dataset, the Australian Workplace Industrial Relations Survey 1995 (AWIRS 95), to separate the influence of wages from the influence of other factors affecting youth employment. The analysis reveals a significant negative relationship between youth employment and youth wages. The best estimates suggest that a one per cent increase in youth wages would lead to a decrease in youth employment of between two and five per cent in industries employing a relatively high proportion of youth. The evidence of a relationship between youth and adult employment is much less robust. To the extent that replacing such awards with non-discriminatory alternatives would lead to an increase in youth wages, the results suggest quite strongly that there would be a more than proportionate reduction in youth employment. An assessment of the effect on adult employment, however, is hampered by data limitations. Show less