The effect of minimum wage increase on employment : panel data evidence from Canadian provinces

Abstract

This paper studies the effects of a minimum wage increase on the employment rates of immigrants and non-immigrants in Canada's Atlantic region, particularly those with high school or more education. In estimating the effects, we used a balanced panel data across four Canadian provinces from 2008 to 2018. Ordinary least squares estimates suggest that a 1% increase in minimum wage will result in a 1.022% decline in the employment rates of immigrants and a 1.239% decline in the employment rates of non- immigrants. The increase in the minimum wage from 2008-2018 for both groups shows that the employment rate of non-immigrants is more affected than immigrants. Furthermore, more attention should be paid to understand why minimum wage affects non-immigrants more. Our results are statistically significant, and the findings are consistent with the predictions of conventional economic theory.