Effects of Minimum Wage on Youth Employment and School Enrolment in Canada

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Yusuff, Olusola Mufutau
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Lethbridge, Alta. : University of Lethbridge, Dept. of Economics
Based on the Public Use of Microdata of Survey of Labour and Income Dynamics, we examine the effects of changes to minimum wage on youth employment and school enrollment across Canada over the period 2005–2011. Using multinomial logistic model, our estimate confirms the postulated neoclassical model disemployment effects for low-skilled workers. Our result suggests that a 10 percent increase in the minimum wage is associated with approximately 3.96 percent decrease in youth employment. More interestingly, we found a positive relationship between minimum wage and school enrollment such that a 10 percent increase in minimum wage is associated with a 3.6 percent increase in school enrollment among youth of 16 to 19 years of age. In addition, estimating the transition probabilities among the possible employment-enrollment activities, we found no substantial evidence to support substitution and queuing hypotheses proposed in past literatures in Canada.
College attendance , Minimum wage , Youth Employment