VOLUME 2 - ISSUE 4

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What is an Alternative to the Minimum Wage in Canada?: A Comprehensive Literature Review of Price Floors and Welfare Systems in Canada

George Agia
Volume 2, Issue 4
23 June 2022
Page No.: 3935-3948

This paper analyzes the research on price floors and welfare systems in Canada through a qualitative and quantitative framework to ensure its validity. It examines the current effects of the minimum wage and offers critical insight into a refined form of welfare known as the “Negative Income Tax” that can assist policymakers in implementing the most effective welfare policy. The author argues that the minimum wage negatively affects the economy as it produces a wide variety of externalities, one being that it can result in higher unemployment among low-skilled workers and young people (Campolieti et al., 2006). The minimum wage is a price floor, meaning the government can impose a price above the current market equilibrium wherein demand and supply intersect. Thus, the author suggests that Canada should adopt a Negative Income Tax (NIT) policy that would not result in the same externalities as the minimum wage, as this policy is not a price floor. One notable phenomenon of pursuing an NIT is that it substantially increases the productivity of single parents receiving welfare (Riddell & Riddell, 2021).

George Agia
BBA, University of Toronto, Scarborough

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[10] Riddell, C., & Riddell, W. C. (2021). Welfare versus work under a negative income tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments. SSRN Electronic Journal, 1–45. https://doi.org/10.2139/ssrn.3896797

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[12] Wolfson, M. (2021, April 6). How a guaranteed income could work. Policy Options. Retrieved May 15, 2022, from https://policyoptions.irpp.org/magazines/july-2018/how-a-guaranteed-income-could-work/

Agia G. (2022). What is an Alternative to the Minimum Wage in Canada?: A Comprehensive Literature Review of Price Floors and Welfare Systems in Canada. International Journal of Policy Sciences and Law, 2(4), 3935-3948.

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