Prevailing Wage Regulations and School Construction Costs: Cumulative Evidence from British Columbia

Kevin Duncan, Peter Philips and Mark Prus

Industrial Relations: A Journal of Economy and Society, 2014, vol. 53, issue 4, 593-616

Abstract: type="main" xml:id="irel12072-abs-0001">

The effect of prevailing wage laws on the cost of public construction has been the subject of an ongoing public policy debate. We measure this effect by comparing the public/private construction cost differential for schools built before and after British Columbia's Skills Development and Fair Wage Policy. Regression results indicate that public schools were 40.5 percent more expensive to build prior to the policy. This differential was 40.1 percent after the policy's enforcement. However, this change is not statistically significant. Regression results also indicate a stable construction cost function over the policy period. These results indicate that the effect of fair wage requirements was not different from zero in terms of magnitude or statistical significance. Combining these results with the findings of our previous research provides a comprehensive view regarding the effect of the British Columbian prevailing wage policy on school construction. This body of research, utilizing a variety of statistical methods, provides consistent evidence indicating that a relatively strong prevailing wage policy was not associated with changes in the efficiency or productivity of construction that contributes to increased building costs.

Date: 2014
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