The Effects of Minimum Wage on Employment and Labor Force Participation in The Province of Quebec (Canada)

The purpose of this study is to estimate the effects of legal minimum wage rate changes on the employment and labor force participation ratios of eight age-sex demographic cohorts in the Province of Quebec over the period 1966-1981. Age classes include teenagers, young adults, adults and older individuals. The theoretical model largely builds along analytical developments proposed by Mincer, Welch and Gramlich and adds considerations on interactions between minimum wages and unemployment insurance, welfare benefits and changes in relative supply; it also considers nonconstant employment elasticities with respect to minimum wage and nonhomogeneous labor. Quarterly time-series regression equations are estimated through ordinary least squares. The empirical analysis focuses on the problem of sensitivity of the minimum wage estimates. This is done by splitting the period of observation into two sub-periods, testing alternative measures of minimum wage, entering independent variables in a stepwise way, correcting for positive autoregression of the residuals and estimating logarithmic and non-logarithmic versions of the models. It is indeed found that minimum wage, however measured, is often a marginal and sensitive variable; its use in the employment and labor force equations for non-teenagers is even questionable. Minimum wage estimated coefficients are more robust in teenage employment ratio equations where disemployment effects are observed; these are similar to those reported in the U.S. empirical literature. Changes in the youth minimum wage differential that exists in this Province is found to have an effect of its own on teenage employment. Effects of minimum wages on labor force participation are weaker and less reliable than employment effects but they tend to be in the same direction.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Labor and Industrial Relations

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Mercier, Jacques

• Economics, Labor

Identifier

(UMI)AAI8409810

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/71537