Effects of Minimum Wages on Employment Dynamics and Prices in the Restaurant Sector: Canada, 1983–2016

Abstract

I estimate the effects of the minimum wage on employment growth and prices in the restaurant industry, using Canadian data from 1983–2000 and 2001–2016. I use a specification that considers lagged effects of the minimum wage as well as longer differences in the data. I find that there is no statistically significant effect on employment growth during 1983–2000, but I find some evidence of pass-through effects of the minimum wage on prices. For 2001–2016, I find a statistically significant and negative effect on employment growth but less evidence of pass-through effects on prices in the short run. However, I find more evidence of pass-through effects on prices when I consider longer adjustment periods based on a specification using longer differences in the data.