Abstract
We estimate the effect of minimum wages on poverty for Canada using data from the Survey of Labour and Income Dynamics (SLID)
for 1997 to 2007 and find that minimum wages do not have a statistically significant effect on poverty and this finding is
robust across a number of specifications. Our simulation results, based on the March 2008 Labour Force Survey (LFS), find
that only about 30 % of the net earnings gain from minimum wage increases goes to the poor while about 70 % “spill over” into
the hands of the non-poor. Furthermore, we find that job losses are disproportionately concentrated on the poor. Our results
highlight that, political rhetoric not-withstanding, minimum wages are poorly targeted as an anti-poverty device and are at
best an exceedingly blunt instrument for dealing with poverty.
for 1997 to 2007 and find that minimum wages do not have a statistically significant effect on poverty and this finding is
robust across a number of specifications. Our simulation results, based on the March 2008 Labour Force Survey (LFS), find
that only about 30 % of the net earnings gain from minimum wage increases goes to the poor while about 70 % “spill over” into
the hands of the non-poor. Furthermore, we find that job losses are disproportionately concentrated on the poor. Our results
highlight that, political rhetoric not-withstanding, minimum wages are poorly targeted as an anti-poverty device and are at
best an exceedingly blunt instrument for dealing with poverty.
- Content Type Journal Article
- Pages 1-16
- DOI 10.1007/s12122-012-9139-8
- Authors
- Michele Campolieti, Department of Management (Scarborough Campus), University of Toronto, Toronto, ON, Canada
- Morley Gunderson, Centre for Industrial Relations and Human Resources and Department of Economics, University of Toronto, 121 St. George Street, Toronto, ON, Canada
- Byron Lee, Renmin Business School, Department of Organization and Human Resources, Renmin University of China, 59 Zhongguancun Street, Haidian District, Beijing, China 100872
- Journal Journal of Labor Research
- Online ISSN 1936-4768
- Print ISSN 0195-3613