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Thinking about Minimum Wage Increases in Alberta: Theoretically, Empirically, and Regionally

Joseph Marchand ()

No 2016-5, Working Papers from University of Alberta, Department of Economics

Abstract: With the change in government in 2015, the province of Alberta committed to a series of four annual minimum wage increases, from an initial rate of $10.20 in 2014 to the goal of a $15.00 minimum wage by 2018. This commentary offers ways to more broadly think about the effects of these provincial increases, with an emphasis on potential employment loss. First, the parameters of this policy are described in a historical and comparative context. Second, a brief synopsis of the general theoretical framework and empirical evidence of minimum wages is provided. The existing theory and empirical evidence are then applied to the policy parameters, in order to gauge what this might generally mean for Alberta. The cyclical boom and bust of the regional economy is then introduced, leading to the recommendation that minimum wage increases this large should be paired with some form of labor demand stimulus. Large minimum wage increases in the absence of such stimulus are likely to lead to a greater loss of employment.

Keywords: Alberta; Canada; energy boom; labor demand; minimum wage (search for similar items in EconPapers)
JEL-codes: J23 J38 Q33 R23 (search for similar items in EconPapers)
Date: 2016-04-14, Revised 2017-01-31
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