Minimum Wage Impacts on Youth Employment Transitions, 1993-1999

Abstract

The longitudinal nature of the Master File of the Survey of Labour and Income Dynamics (SLID) for the period 1993-9, enables comparing transitions from employment to non-employment for individuals affected by minimum wage changes with appropriate comparison groups not affected by minimum wages. This is based on the large number (24) of minimum wage changes that have occurred across the different provincial jurisdictions in Canada over the 1990s. The results indicate that the minimum wage increases have increased the transition from employment to non-employment of employed low-wage youths, who are at-risk of being affected by a minimum wage increase, by around 6 percentage points (ranging from 4 to 8 percentage points). These disemployment effects in turn imply 'minimum wage' elasticities of about -0.4 (ranging from -0.3 to -0.5).