The effect of minimum wage increase on employment in Canada

Abstract

This research investigates the effect of minimum wage increases on employment in Canada, focusing on three age groups: 15-19, 20-24, and 15-24. The study utilizes provincial data from 1983 to 2022 and employs Neumark's (2001) pre-specified design to analyze the ratio format of the explanatory variables. Additionally, this study slightly modifies Neumark’s design to analyze the explanatory variables in a non-ratio format. The model results indicate no statistically significant relationship between minimum wage and employment for all age groups for Neumark’s (2001) pre-specified model and the modified form. The overall results suggest that firms may respond to minimum wage increases by adjusting other variables such as non-wage benefits, prices, profits, etc.