IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11585.html
   My bibliography  Save this paper

Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland

Author

Listed:
  • McVicar, Duncan

    (Queen's University Belfast)

  • Park, Andrew

    (University of Ulster)

  • McGuinness, Seamus

    (Economic and Social Research Institute, Dublin)

Abstract

This paper examines employment and hours impacts of the 1999 introduction of the UK National Minimum Wage (NMW) and the 2016 introduction of the UK National Living Wage (NLW) in Northern Ireland (NI). NI is the only part of the UK with a land border where the NMW and NLW cover those working on one side of the border (NI) but not those working on the other side of the border (Republic of Ireland). This discontinuity in minimum wage coverage enables a research design that estimates the impacts of the NMW and NLW on employment and hours worked using difference-in-differences. We find a small decrease in the employment rate of 22-59/64 year olds in NI, of up to two percentage points, in the year following the introduction of the NMW, but no impact on hours worked. We find no evidence that the introduction of the NLW impacted either employment or hours worked in NI.

Suggested Citation

  • McVicar, Duncan & Park, Andrew & McGuinness, Seamus, 2018. "Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland," IZA Discussion Papers 11585, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11585
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11585.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    3. Mark B. Stewart & Joanna K. Swaffield, 2008. "The Other Margin: Do Minimum Wages Cause Working Hours Adjustments for Low‐Wage Workers?," Economica, London School of Economics and Political Science, vol. 75(297), pages 148-167, February.
    4. Jonathan Meer & Jeremy West, 2016. "Effects of the Minimum Wage on Employment Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 500-522.
    5. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    6. Machin, Stephen & Manning, Alan & Rahman, Lupin, 2002. "Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector," LSE Research Online Documents on Economics 20070, London School of Economics and Political Science, LSE Library.
    7. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
    8. David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    9. Richard Dickens & Rebecca Riley & David Wilkinson, 2011. "The UK Minimum Wage at Age 22: A Regression Discontinuity Approach," Working Paper Series 2111, Department of Economics, University of Sussex Business School.
    10. Stephen Machin & Alan Manning & Lupin Rahman, 2003. "Where the Minimum Wage Bites Hard: Introduction of Minimum Wages to a Low Wage Sector," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 154-180, March.
    11. Kenneth A. Couch & David C. Wittenburg, 2001. "The Response of Hours of Work to Increases in the Minimum Wage," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 171-177, July.
    12. Zavodny, Madeline, 2000. "The effect of the minimum wage on employment and hours," Labour Economics, Elsevier, vol. 7(6), pages 729-750, November.
    13. Charles Brown & Curtis Gilroy & Andrew Kohen, 1982. "The Effect of the Minimum Wage on Employment and Unemployment: A Survey," NBER Working Papers 0846, National Bureau of Economic Research, Inc.
    14. Catrin Ormerod & Felix Ritchie, 2007. "Issues in the measurement of low pay," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 1(6), pages 37-45, June.
    15. Mark B. Stewart, 2002. "Estimating the Impact of the Minimum Wage Using Geographical Wage Variation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(supplemen), pages 583-605, December.
    16. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
    17. 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.
    18. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    19. Megan Linde Leonard & T. D. Stanley & Hristos Doucouliagos, 2014. "Does the UK Minimum Wage Reduce Employment? A Meta-Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 499-520, September.
    20. Dale Belman & Paul Wolfson & Kritkorn Nawakitphaitoon, 2015. "Who Is Affected by the Minimum Wage?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 582-621, October.
    21. 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.
    22. Nolan, Brian & O'Neill, Donal & Williams, James, 2002. "The Impact of The Minimum Wage on Irish Firms," Research Series, Economic and Social Research Institute (ESRI), number PRS44.
    23. Richard Dickens & Rebecca Riley & David Wilkinson, 2014. "The UK minimum wage at 22 years of age: a regression discontinuity approach," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 177(1), pages 95-114, January.
    24. repec:bla:obuest:v:64:y:2002:i:s1:p:583-605 is not listed on IDEAS
    25. 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.
    26. repec:bla:obuest:v:64:y:2002:i:0:p:583-605 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Neumark, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 293-329, August.
    2. Ranjan, Priya & Neumark, David & Rodriguez-Lopez, Antonio, 2022. "What's across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects," IZA Discussion Papers 15282, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arindrajit Dube & Attila Lindner, 2024. "Minimum Wages in the 21st Century," RF Berlin - CReAM Discussion Paper Series 2524, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    2. Mario Bossler & Hans-Dieter Gerner, 2020. "Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1070-1094, October.
    3. Tomas Kucera, 2020. "Are Employment Effects of Minimum Wage the Same Across the EU? A Meta-Regression Analysis," Working Papers IES 2020/2, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2020.
    4. Schumann, Mathias, 2017. "The effects of minimum wages on firm-financed apprenticeship training," Labour Economics, Elsevier, vol. 47(C), pages 163-181.
    5. Neumark David, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, De Gruyter, vol. 20(3), pages 293-329, August.
    6. Peng Jia, 2014. "Employment and Working Hour Effects of Minimum Wage Increase: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(2), pages 61-80, March.
    7. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    8. 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.
    9. Laporsek, Suzana & Orazem, Peter F. & Vodopivec, Matija & Vodopivec, Milan, 2019. "Long-Term Responses to Large Minimum Wage Shocks: Sub-Minimum and Super-Minimum Workers in Slovenia," IZA Discussion Papers 12123, Institute of Labor Economics (IZA).
    10. 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.
    11. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    12. 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.
    13. Brian Bell & Stephen Machin, 2018. "Minimum Wages and Firm Value," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 159-195.
    14. Anna Baranowska-Rataj & Iga Magda, 2015. "The impact of the minimum wage on job separations and working hours among young people in Poland," Working Papers 75, Institute of Statistics and Demography, Warsaw School of Economics.
    15. Dale Belman & Paul Wolfson & Kritkorn Nawakitphaitoon, 2015. "Who Is Affected by the Minimum Wage?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 582-621, October.
    16. Sara Wong, 2017. "Minimum wage impacts on wages and hours worked of low-income workers in Ecuador," Working Papers PMMA 2017-14, PEP-PMMA.
    17. Mark B. Stewart & Joanna K. Swaffield, 2008. "The Other Margin: Do Minimum Wages Cause Working Hours Adjustments for Low‐Wage Workers?," Economica, London School of Economics and Political Science, vol. 75(297), pages 148-167, February.
    18. Kelly, Elish & McGuinness, Seamus, 2017. "A study of sub-minimum wage rates for young people," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT327.
    19. Wong, Sara A., 2019. "Minimum wage impacts on wages and hours worked of low-income workers in Ecuador," World Development, Elsevier, vol. 116(C), pages 77-99.
    20. 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).

    More about this item

    Keywords

    employment; Northern Ireland; minimum wages; hours;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11585. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.