Minimum Wage Increases and Teen Time Allocation:\ from the American Time Use Survey

Abstract

How do state minimum wage increases affect teen labor supply and time allocation? Using time-diary data from the American Time Use Survey (2010–2023), I examine effects on the extensive margin (probability of any work on the diary day) and unconditional work time among 16–19 year olds. The identifying variation comes from states that newly exceeded the federal minimum wage floor (\$7.25) during this period, though relatively few states switched treatment status—most in 2014–2015—severely limiting statistical power. Using two-way fixed effects (TWFE) with year$\times$month fixed effects, I find that minimum wage increases reduce diary-day work time by 3.2 minutes (95% CI: [$-$12.4, 6.0]), statistically indistinguishable from zero. Decomposing this into extensive and intensive margins, I find a 1.8 percentage point reduction in the probability of any work (95% CI: [$-$6.9, 3.3]) with wide confidence intervals that cannot rule out economically meaningful effects in either direction. Continuous treatment specifications using log minimum wage or dollar gap above federal yield similar null results with even wider confidence intervals. Education time increases slightly (1.4 minutes), suggesting possible reallocation from work toward schooling, though estimates are imprecise. The primary contribution is methodological: ATUS time diaries provide outcomes measured within the same calendar month as the assigned treatment, avoiding the temporal misalignment that affects standard labor force surveys. However, identification is fundamentally constrained by minimal policy variation—a limitation that continuous treatment measures cannot fully overcome when few states change treatment status.