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The (Non) Impact of Minimum Wages on Poverty: Regression and Simulation Evidence for Canada

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  • Michele Campolieti
  • Morley Gunderson
  • Byron Lee

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    Abstract

    We estimate the effect of minimum wages on poverty for Canada using data from the Survey of Labour and Income Dynamics (SLID) for 1997 to 2007 and find that minimum wages do not have a statistically significant effect on poverty and this finding is robust across a number of specifications. Our simulation results, based on the March 2008 Labour Force Survey (LFS), find that only about 30 % of the net earnings gain from minimum wage increases goes to the poor while about 70 % “spill over” into the hands of the non-poor. Furthermore, we find that job losses are disproportionately concentrated on the poor. Our results highlight that, political rhetoric not-withstanding, minimum wages are poorly targeted as an anti-poverty device and are at best an exceedingly blunt instrument for dealing with poverty. Copyright Springer Science+Business Media, LLC 2012

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Labor Research.

    Volume (Year): 33 (2012)
    Issue (Month): 3 (September)
    Pages: 287-302

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    Handle: RePEc:spr:jlabre:v:33:y:2012:i:3:p:287-302

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    Web page: http://www.springer.com/economics/journal/12122

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    Related research

    Keywords: Minimum wages; Poverty; Canada; J30; J38; J80; J13;

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    1. Ronald G. Ehrenberg & Alan J. Marcus, 1982. "Minimum Wages and Teenagers' Enrollment-Employment Outcomes: A Multinomial Logit Model," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 39-58.
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    Cited by:
    1. Kapelyuk Sergey, 2014. "Impact of minimum wage on income distribution and poverty in Russia," EERC Working Paper Series 14/03e, EERC Research Network, Russia and CIS.

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