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A Re-examination of the Impact of the UK National Minimum Wage on Employment

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  • Richard Dickens
  • Rebecca Riley
  • David Wilkinson

Abstract

type="main" xml:id="ecca12158-abs-0001"> Early work on the national minimum wage (NMW) suggested that policymakers in the UK had succeeded in raising the pay of low-paid workers without impairing their employment prospects. This paper shows that when we focus on the most vulnerable workers, part-time females, the NMW appears to be associated with reductions in employment retention. These negative impacts were evident when the NMW was introduced and also when it was increased faster than average wages in the mid-2000s. We also show that these falls in employment among part-time females are exacerbated by the recession.

Suggested Citation

  • Richard Dickens & Rebecca Riley & David Wilkinson, 2015. "A Re-examination of the Impact of the UK National Minimum Wage on Employment," Economica, London School of Economics and Political Science, vol. 82(328), pages 841-864, October.
    • Handle: RePEc:bla:econom:v:82:y:2015:i:328:p:841-864
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    1. Peter Dolton & Chiara Rosazza Bondibene & Jonathan Wadsworth, 2012. "Employment, Inequality and the UK National Minimum Wage over the Medium‐Term," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(1), pages 78-106, February.
    2. Mark B. Stewart, 2012. "Quantile estimates of counterfactual distribution shifts and the effect of minimum wage increases on the wage distribution," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 175(1), pages 263-287, January.
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    4. repec:bla:obuest:v:64:y:2002:i:0:p:583-605 is not listed on IDEAS
    5. Peter Dolton & Chiara Rosazza Bondibene, 2012. "The international experience of minimum wages in an economic downturn [The tail of two countries: minimum wage and employment in France and the United-States]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(69), pages 99-142.
    6. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626, November.
    7. Richard Dickens & Mirko Draca, 2005. "The Employment Effects of the October 2003 Increase in the National Minimum Wage," CEP Discussion Papers dp0693, Centre for Economic Performance, LSE.
    8. Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, March.
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    Cited by:

    1. Seltzer, Andrew & Borland, Jeff, 2016. "The Impact of the 1896 Factory and Shops Act on Victorian Labour Markets," IZA Discussion Papers 10388, Institute of Labor Economics (IZA).
    2. Lei Xu & Yu Zhu, 2023. "Does the employment effect of national minimum wage vary by non‐employment rate? A regression discontinuity approach," Manchester School, University of Manchester, vol. 91(1), pages 18-36, January.
    3. Bossler, Mario & Gürtzgen, Nicole & Lochner, Benjamin & Betzl, Ute & Feist, Lisa & Wegmann, Jakob, 2018. "Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen," IAB-Forschungsbericht 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Laws, A., 2018. "Do minimum wages increase search effort?," Cambridge Working Papers in Economics 1857, Faculty of Economics, University of Cambridge.
    5. Oliver Bruttel, 2019. "The effects of the new statutory minimum wage in Germany: a first assessment of the evidence," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-13, December.
    6. Garcia-Louzao, Jose & Tarasonis, Linas, 2023. "Wage and Employment Impact of Minimum Wage: Evidence from Lithuania," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 592-609.
    7. Maitre, Bertrand & McGuinness, Seamus & Redmond, Paul, 2017. "A study of minimum wage employment in Ireland: The role of worker, household and job characteristics," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT332.
    8. Elodie Andrieu & Malgorzata Kuczera, 2023. "Minimum Wage and Skills -Evidence from Job Vacancy Data," Working Papers 034, The Productivity Institute.
    9. McGuinness, Seamus & Redmond, Paul, 2018. "Estimating the effect of an increase in the minimum wage on hours worked and employment in Ireland," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT354.
    10. Cai, Lixin & Mavromaras, Kostas & Sloane, Peter J., 2016. "Low Paid Employment in Britain: Estimating State-Dependence and Stepping Stone Effects," IZA Discussion Papers 9633, Institute of Labor Economics (IZA).
    11. Roy E. Bailey & Timothy J. Hatton & Kris Inwood, 2016. "Atmospheric Pollution and Child Health in Late Nineteenth Century Britain," CEH Discussion Papers 052, Centre for Economic History, Research School of Economics, Australian National University.
    12. García-Morán Eva & Jiang Ming-Jin & Rachinger Heiko, 2024. "Minimum Wage Effects on Job Attachment: A Gender Perspective," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 244(1-2), pages 83-112, February.
    13. McVicar Duncan & Park Andrew & McGuinness Seamus, 2019. "Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-20, June.
    14. Jan Fidrmuc & J. D. Tena, 2013. "National Minimum Wage and Employment of Young Workers in the UK," CESifo Working Paper Series 4286, CESifo.
    15. Wannaphong Durongkaveroj, 2017. "Minimum Wage and Lives of the Poor: Evidence from Thailand," PIER Discussion Papers 76, Puey Ungphakorn Institute for Economic Research.
    16. McGuinness, Seamus & Redmond, Paul & Delaney, Judith, 2019. "The prevalence and effect on hours worked of the minimum wage in Ireland: A sectoral and regional analysis," Research Series, Economic and Social Research Institute (ESRI), number RS93.
    17. Redmond, Paul, 2020. "Minimum wage policy in Ireland," Papers BP2021/2, Economic and Social Research Institute (ESRI).
    18. Riley, Rebecca & Rosazza Bondibene, Chiara, 2017. "Raising the standard: Minimum wages and firm productivity," Labour Economics, Elsevier, vol. 44(C), pages 27-50.
    19. Jiménez Martínez, Mónica & Jiménez Martínez, Maribel, 2021. "Are the effects of minimum wage on the labour market the same across countries? A meta-analysis spanning a century," Economic Systems, Elsevier, vol. 45(1).

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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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