THE EFFECT OF GOVERNMENT-MANDATED BENEFITS ON YOUTH EMPLOYMENT

The author empirically examines the effect on youth employment of gove rnment-mandated employer-provided benefits. In particular, he investig ates the effect of unemployment compensation insurance taxes and worke rs' compensation insurance mandates on the employment of youths (aged 16-19) and young adults (aged 20-24 and 25-34). An analysis of time se ries state aggregate data for the years 1982-89 indicates that a one p ercentage point increase in the employer's cost of workers' compensati on insurance reduced employment for both teenagers and young adults by about 1.5 percentage points. Unemployment insurance taxes significant ly decreased the employment of teenagers, but not that of young adults .