The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law

Posted: 24 May 1999

See all articles by Michael Baker

Michael Baker

University of Toronto - Department of Economics; National Bureau of Economic Research (NBER)

Dwayne Benjamin

University of Toronto

Shuchita Stanger

affiliation not provided to SSRN

Abstract

We examine the effects of minimum wage legislation in Canada over the period 1975-93. For teenagers we find that a 10% increase in the minimum wage is associated with roughly a 2.5% decrease in employment. We also find that this result is driven by low frequency variation in the data. At high frequencies the elasticity is positive and insignificant. The difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies. It also provides a simple reconciliation of the "new minimum wage research," which reports very small negative, or positive, elasticities.

JEL Classification: J31, J38

Suggested Citation

Baker, Michael and Benjamin, Dwayne and Stanger, Shuchita, The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law. Available at SSRN: https://ssrn.com/abstract=165769

Michael Baker

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4138 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Dwayne Benjamin (Contact Author)

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-6130 (Phone)
416-978-6713 (Fax)

Shuchita Stanger

affiliation not provided to SSRN

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