Volume 38, Number 3 (Summer) 2003
Yuen, Terence. 2003. "The Effect of Minimum Wages on Youth Employment in Canada: A Panel Study." Journal of Human Resources 38(3):647-672.
Previous U.S. panel estimates of minimum wage effects have been
criticized on the grounds that their identification rests on comparisons of
"low-wage" and "high-wage" workers. Using Canadian panel data for 1988-90, 1
compare estimates based on the traditional U.S. methodology with those based on
samples of "low-wage" workers exclusively. The results would appear to vindicate
the critics: The minimum wage effect from the latter approach is virtually zero.
Yet, estimates from different subgroups of low-wage workers indicate that there
is a significant disemployment effect for those with longer low-wage employment
histories. This highlights the heterogeneity within low-wage workers and the
importance of carefully defining the target group not solely based on workers'
wages.
Terence Yuen is a senior analyst at the Bank of Canada. The views
expressed herein are solely those of the author and should not be attributed to
the Bank of Canada. The author is very grateful to Michael Baker and Dwayne
Benjamin for their continued guidance in conducting this study. He also thanks
Irene Ip, Felice Martinello, an anonymous referee, and seminar participants at
the University of Toronto, and the 1996 Canadian Economics Association Meetings
for helpful comments. The Canadian International Labour Network provided
financial support for this research. The data used in this article can be
obtained beginning February, 2004 through January 2007 from the author at the
Bank of Canada, 234 Wellington, Ottawa. Ontario, KIA OG9.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X