One of the more puzzling features of the Canadian labour market in the last few years recovery has been the stubborn refusal of youth employment rates to recover from the recession:
There may a relatively simple (partial) explanation. This is taken from a recent Statistics Canada study on trends in the minimum wage:
There seems to be a broad consensus around "small increases in the minimum wage will have small effects on employment", but this is not a small increase: the CPI-corrected Canadian minimum wage increased by 12.9% between 2008 and 2013. So in this post I'm going to try to put together some back-of-envelope numbers about what sort of effect this increase has had on youth employment.
The counterfactual I'm going to consider is: What would have happened to youth employment if Canadian real minimum wages had simply increased in line with the CPI since 2008? That is to say: what were the effects of that extra increase of 0.1215 ( = log[1.1292]) in the log of the minimum wage between 2008 and 2013?