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Minimum Wages and the Joint Distribution of Employment and Wages

This paper proposes a new procedure to jointly estimate the effect of the minimum wage on the distribution of wages and employment. The proposed approach offers a common framework for modelling the effect of the minimum wage on both employment and the distribution of wages using distribution regressions. Using Canadian data from 19972010, I find that for teenagers, increases in the minimum wages “pushes up” a large fraction of workers to the new minimum wage, but also yields some modest employment losses. There are no discernable impacts of the minimum wage for young adults.