The highs and lows of the minimum wage effect: A time-series cross-sectionstudy of the Canadian law

We examine the effects of minimum wage legislation in Canada over the perio d 1975-93. For teenagers we find that a 10% increase in the minimum wage is associated with roughly a 2.5% decrease in employment. We also find that t his result is driven by low frequency variation in the data. At high freque ncies the elasticity is positive and insignificant. The difference in the e lasticity across the bandwidth has implications for the interpretation of e mployment dynamics as a result of minimum wage policy and experimental desi gn in minimum wage studies. It also provides a simple reconciliation of the "new minimum wage research," which reports very small negative, or positiv e, elasticities.