Employment Effects of the Minimum Wage: Panel Data Evidence from Canadian Provinces

Recent U.S. studies offer conflicting evidence on minimum wage impacts. This paper studies the effects of 185 amendments to minimum wage on employment rates using panel data across Canadian provinces from 1981 to 2011. Ordinary least squares and instrumental variables (IV) estimates imply a 10% increase in minimum wage is associated with a 1% – 4% reduction to employment rates for both male and female teens. We also find that an increase in the minimum wage is associated with lower employment of prime-aged immigrants. Our results are robust to a wide array of IV and the use of controls for spatial heterogeneity.