Abstract
This paper investigates the impact of the absolute and relative minimum wage on skill premium and on-the-job education investments. It explores variations of price levels across states and time to identify the effects of the national minimum wage. Findings indicate that the absolute minimum wage reduces the skill premium and negatively affects, on average, educational acquisition, particularly at the bottom of the wage distribution. Conversely, the relative minimum wage increases the skill premium for top levels of education and, on average, has no significant effect on education investments, but there is some evidence for heterogeneous effects across the distribution.
