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Minimum wage impacts on youth employment transitions, 1993–1999

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  • Michele Campolieti
  • Tony Fang
  • Morley Gunderson

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). Les impacts du salaire minimum sur les transitions emploi‐non‐emploi pour les jeunes: 1993–1999. La nature longitudinale des résultats de l’Enquête sur la dynamique du travail et du revenu pour la période 1993–99 permet de comparer les transitions de l’emploi au non‐emploi pour les personnes affectées par les changements dans le salaire minimum avec celles qu’on observe pour les groupes qui ne sont pas affectés par le salaire minimum. Ce travail est basé sur un grand nombre de changements (24) dans le salaire minimum qui ont été décrétés dans les diverses provinces du Canada dans les années 1990. Les résultats montrent que les accroissements dans le niveau du salaire minimum ont augmenté le transfert de l’emploi vers le non‐emploi des jeunes qui étaient employés dans des tâches à bas salaire (ceux qui sont vulnérables quand il y a accroissement du salaire minimum) d’environ 6 points de pourcentage (l’éventail étant de 4 à 8 points de pourcentage). Ces effets de désemploi suggèrent que les élasticités de transfert en réaction à des changements du salaire minimum sont de l’ordre de −0.4 (l’éventail étant de −0.3 à−0.5).

Suggested Citation

  • Michele Campolieti & Tony Fang & Morley Gunderson, 2005. "Minimum wage impacts on youth employment transitions, 1993–1999," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(1), pages 81-104, February.
    • Handle: RePEc:wly:canjec:v:38:y:2005:i:1:p:81-104
    DOI: 10.1111/j.0008-4085.2005.00270.x
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    References listed on IDEAS

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    1. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163, Elsevier.
    2. Linneman, Peter, 1982. "The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 443-469, June.
    3. Terence Yuen, 2003. "The Effect of Minimum Wages on Youth Employment in Canada: A Panel Study," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
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    1. Rice, Patricia, 2006. "Wages and the education and employment choices of young people: empirical analysis for Great Britain," Discussion Paper Series In Economics And Econometrics 612, Economics Division, School of Social Sciences, University of Southampton.
    2. Tony Fang & Morley Gunderson, 2009. "Minimum Wage Impacts on Older Workers: Longitudinal Estimates from Canada," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 371-387, June.
    3. Brewer, Mike & Crossley, Thomas F. & Zilio, Federico, 2019. "What Do We Really Know about the Employment Effects of the UK's National Minimum Wage?," IZA Discussion Papers 12369, Institute of Labor Economics (IZA).
    4. Céspedes, Nikita & Sánchez, Alan, 2013. "Minimum Wage and Job Mobility," Working Papers 2013-012, Banco Central de Reserva del Perú.
    5. David A. Green, 2014. "What Is a Minimum Wage For? Empirical Results and Theories of Justice," Canadian Public Policy, University of Toronto Press, vol. 40(4), pages 293-314, December.
    6. Richard V. Burkhauser & Joseph J. Sabia, 2007. "The Effectiveness Of Minimum‐Wage Increases In Reducing Poverty: Past, Present, And Future," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 262-281, April.
    7. Fone, Zachary S. & Sabia, Joseph J. & Cesur, Resul, 2023. "The unintended effects of minimum wage increases on crime," Journal of Public Economics, Elsevier, vol. 219(C).
    8. Tony Fang & Morley Gunderson & Carl Lin, 2021. "The impact of minimum wages on wages, wage spillovers, and employment in China: Evidence from longitudinal individual‐level data," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 854-877, May.
    9. David Neumark, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 293-329, August.
    10. Cuong Viet Nguyen, 2013. "The impact of minimum wages on employment of low-wage workers," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(3), pages 583-615, July.
    11. Grimshaw, Damian., 2014. "At work but earning less : trends in decent pay and minimum wages for young people," ILO Working Papers 994862833402676, International Labour Organization.
    12. Wannaphong Durongkaveroj, 2022. "Does the minimum wage improve the welfare of workers? Evidence from the 2013 minimum wage reform in Thailand," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 52-70, November.
    13. Rice, Patricia, 2006. "Wages and the education and employment choices of young people: empirical analysis for Great Britain," Discussion Paper Series In Economics And Econometrics 0612, Economics Division, School of Social Sciences, University of Southampton.
    14. Michal Pícl & Petr Richter, 2014. "The Minimum Wage and Its Impact on Unemployment in the Czech Republic [Minimální mzda a její vliv na nezaměstnanost v ČR]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2014(6), pages 51-65.
    15. Michele Campolieti & Morley Gunderson & Byron Lee, 2014. "Minimum Wage Effects On Permanent Versus Temporary Minimum Wage Employment," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 578-591, July.
    16. Kate Rybczynski & Anindya Sen, 2018. "Employment Effects Of The Minimum Wage: Panel Data Evidence From Canadian Provinces," Contemporary Economic Policy, Western Economic Association International, vol. 36(1), pages 116-135, January.
    17. repec:ilo:ilowps:486283 is not listed on IDEAS
    18. Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2012. "Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State," ILR Review, Cornell University, ILR School, vol. 65(2), pages 350-376, April.
    19. Ernest Boffy-Ramirez, 2022. "Push or Pull? Measuring the labor supply response to the minimum wage using an individual-level panel," Applied Economics, Taylor & Francis Journals, vol. 54(35), pages 4043-4059, July.
    20. Michele Campolieti & Morley Gunderson & Byron Lee, 2012. "The (Non) Impact of Minimum Wages on Poverty: Regression and Simulation Evidence for Canada," Journal of Labor Research, Springer, vol. 33(3), pages 287-302, September.
    21. Nguyen, Cuong, 2009. "Do Minimum Wage Increases Matter to Profitability of Private Firm? The Case of Vietnam," MPRA Paper 48655, University Library of Munich, Germany.
    22. Jose Fernandez & Thomas Holman & John V. Pepper, 2014. "The Impact of Living-Wage Ordinances on Urban Crime," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 478-500, July.
    23. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.
    24. Boffy-Ramirez, Ernest, 2019. "The Short-Run Effects of the Minimum Wage on Employment and Labor Market Participation: Evidence from an Individual-Level Panel," IZA Discussion Papers 12137, Institute of Labor Economics (IZA).

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