, Volume 26, Issue 3, pp 533-545

How minimum wages affect schooling-employment outcomes in Canada, 1993–1999

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Based on longitudinal data from the Master File of the Survey of Labour and Income Dynamics (SLID) for Canada for 1993-1999, we provide multinomial logit estimates of the effect of minimum wages on the probability of being in one of four schooling-employment states as well as transitions across the states. We find that minimum wage increases led to large and statistically significant reductions in the employment of teenagers but had no net effect on their school enrollment or on the individual transition probabilities. We also find no substantial substitution of students for nonstudents or students leaving school to queue for the higher minimum wage jobs.