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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: In 2015, Alberta became the first province in Canada to commit to a $15.00 minimum wage, from an initial rate of $10.20 to $15.00 by 2018, through four annual increases. This commentary offers ways to more broadly think about the effects of these minimum wage increases, with an emphasis on potential employment loss. Following a description of the policy parameters, theoretical framework, and previous empirical evidence, back-of-the envelope calculations are provided for Alberta, which result in a potential loss of roughly 25,000 jobs. Given the boom and bust nature of the regional economy, Alberta should have timed its minimum wage increases with upward movements in energy prices, and/or followed through with its initial job creation tax credit or some other economic flexibility. Instead, by ignoring economic conditions, the province wrongfully prioritized wages during a time when employment was a problem.

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 2017-06-30
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Handle: RePEc:ris:albaec:2016_005