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The Effect of Minimum Wages on Youth Employment in Canada: A Panel Study

  • Terence Yuen
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    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, I 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.

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    File URL: http://jhr.uwpress.org/cgi/reprint/XXXVIII/3/647
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    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 38 (2003)
    Issue (Month): 3 ()
    Pages:

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    Handle: RePEc:uwp:jhriss:v:38:y:2003:i:3:p647-672
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    1. 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 443-69, June.
    2. Burkhauser, Richard V & Couch, Kenneth A & Wittenburg, David C, 2000. "A Reassessment of the New Economics of the Minimum Wage Literature with Monthly Data from the Current Population Survey," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 653-80, October.
    3. Pierre Fortin & Manfred Keil & James Symons, 1995. "The Sources of Unemployment in Canada, 1967-1991: Evidence from a Panel of Regions and Demographic Groups," Cahiers de recherche CREFE / CREFE Working Papers 36, CREFE, Université du Québec à Montréal.
    4. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
    5. Brown, Charles, 1988. "Minimum Wage Laws: Are They Overrated?," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 133-45, Summer.
    6. Joseph Schaafsma & William D. Walsh, 1983. "Employment and Labour Supply Effects of the Minimum Wage: Some Pooled Time-Series Estimates from Canadian Provincial Data," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 86-97, February.
    7. Robert Swidinsky, 1980. "Minimum Wages and Teenage Unemployment," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 158-71, February.
    8. Grenier, Gilles & Séguin, Marc, 1991. "L’incidence du salaire minimum sur le marché du travail des adolescents au Canada : une reconsidération des résultats empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 67(2), pages 123-143, juin.
    9. Alison J. Wellington, 1991. "Effects of the Minimum Wage on the Employment Status of Youths: An Update," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 27-46.
    10. Jones, Stephen R G & Riddell, W Craig, 1995. "The Measurement of Labor Force Dynamics with Longitudinal Data: The Labour Market Activity Survey Filter," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 351-85, April.
    11. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
    12. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
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