Open AccessFinancing Human Capital Development By Increasing The Minimum Wage: Evidence From Canada
Author(s) -
Mahmoud Yousef Askari
Publication year - 2015
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v31i4.9340
Subject(s) - subsidy , minimum wage , human capital , economics , labour economics , wage , poverty , revenue , index (typography) , living wage , government (linguistics) , empirical evidence , work (physics) , tax revenue , finance , public economics , economic growth , mechanical engineering , linguistics , philosophy , epistemology , world wide web , computer science , engineering , market economy
This study provides empirical evidence that using the minimum wage as a tool to generate extra taxes to establish a fully publically-funded higher education system is a harmless approach to boost funding for human capital development without changing governments spending priorities or raising current tax rates. The paper proposes a method to finance human capital development through higher education by generating more income taxes from a higher minimum wage and through an effective link of the minimum wage to the Consumer Price Index (CPI) in Canada. The paper also argues that indexed minimum wage adjustments will help in fighting poverty, maintain an acceptable living standard for minimum wage workers, reduce dependence on government subsidies, and make-work more attractive. The paper concludes that using minimum wage adjustments as a tool to generate tax revenues and fund higher education could be an effective fiscal tool and could be considered a safe political instrument.