The (Non) Impact of Minimum Wages on Poverty: Regression and Simulation Evidence for Canada
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
Volume (Year): 33 (2012)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.springer.com/economics/journal/12122|
|Order Information:||Web: http://link.springer.de/orders.htm|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Adam J. Grossberg & Paul Sicilian, 1999. "Minimum Wages, On-the-Job Training, and Wage Growth," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 539-556, January.
- James Long, 1999. "Updated estimates of the wage mobility of minimum wage workers," Journal of Labor Research, Springer, vol. 20(4), pages 493-503, December.
- Baker, Michael & Benjamin, Dwayne & Stanger, Shuchita, 1999. "The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 318-50, April.
- David Neumark & William Wascher, 1998.
"Minimum Wages and Training Revisited,"
NBER Working Papers
6651, National Bureau of Economic Research, Inc.
- Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004.
"Training and the new minimum wage,"
Royal Economic Society, vol. 114(494), pages C87-C94, 03.
- Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2002. "Work-Related Training and the New National Minimum Wage in Britain," IZA Discussion Papers 595, Institute for the Study of Labor (IZA).
- Sen, Anindya & Rybczynski, Kathleen & Van De Waal, Corey, 2011. "Teen employment, poverty, and the minimum wage: Evidence from Canada," Labour Economics, Elsevier, vol. 18(1), pages 36-47, January.
- Andrew Leigh, 2005.
"Does Raising the Minimum Wage Help the Poor?,"
CEPR Discussion Papers
501, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Daniel S. Hamermesh, 2002.
"International Labor Economics,"
NBER Working Papers
8757, National Bureau of Economic Research, Inc.
- Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-49, May.
- David Card, 1992. "Do minimum wages reduce employment? A case study of California, 1987û1989," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 38-54, October.
- David Neumark & William Wascher, 2002.
"Do Minimum Wages Fight Poverty?,"
Western Economic Association International, vol. 40(3), pages 315-333, July.
- Michele Campolieti & Tony Fang & Morley Gunderson, 2003. "How Minimum Wages Affect Schooling-Employment Outcomes in Canada, 1993-1999," Journal of Labor Research, Transaction Publishers, vol. 26(3), pages 533-545, August.
- David Neumark & William Wascher, 1994.
"Minimum Wage Effects on Employment and School Enrollment,"
NBER Working Papers
4679, National Bureau of Economic Research, Inc.
- Neumark, David & Wascher, William, 1995. "Minimum Wage Effects on Employment and School Enrollment," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 199-206, April.
- R. V. Burkhauser & K. A. Couch & A. J. Glenn, . "Public policies for the working poor: The earned income tax credit versus minimum wage legislation," Institute for Research on Poverty Discussion Papers 1074-95, University of Wisconsin Institute for Research on Poverty.
- Michele Campolieti & Tony Fang & Morley Gunderson, 2005. "Minimum wage impacts on youth employment transitions, 1993-1999," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 81-104, February.
- James Ted McDonald & Christopher Worswick, 1999.
"Wages, Implicit Contracts, and the Business Cycle: Evidence from Canadian Micro Data,"
Journal of Political Economy,
University of Chicago Press, vol. 107(4), pages 884-913, August.
- McDonald, J.T. & Worswick, C., 1997. "Wages, Implicit Contracts and the Business Cycle: Evidence from Canadian Micro Data," Department of Economics - Working Papers Series 588, The University of Melbourne.
- 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, 04.
- Joseph J. Sabia & Richard V. Burkhauser, 2010. "Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 592-623, January.
- Lars Osberg, 2000. "Poverty in Canada and the United States: measurement, trends, and implications," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 847-877, November.
- Richard V. Burkhauser & T. Aldrich Finegan, 1989. "The minimum wage and the poor: The end of a relationship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 53-71.
- 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.
- Paul Beaudry & David A. Green, 2000.
"Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 33(4), pages 907-936, November.
- Paul Beaudry & David Green, 1997. "Cohort Patterns in Canadian Earnings: Assessing the Role of Skill Premia in Inequality Trends," NBER Working Papers 6132, National Bureau of Economic Research, Inc.
- Richard Vedder & Lowell Gallaway, 2002. "The Minimum Wage and Poverty among Full-Time Workers," Journal of Labor Research, Transaction Publishers, vol. 23(1), pages 41-49, January.
When requesting a correction, please mention this item's handle: RePEc:spr:jlabre:v:33:y:2012:i:3:p:287-302. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F Baum)
If references are entirely missing, you can add them using this form.