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Dolton, Peter, Chiara Rosazza Bondibene & Michael Stops (2015): Identifying the employment effect of invoking and changing the minimum wage. A spatial analysis of the UK. In: Labour economics, Jg. 37, H. December, S. 54-76., 2015-09-28. DOI:10.1016/j.labeco.2015.09.002

Abstract

"This paper assesses the impact of the National Minimum Wage (NMW) on employment in the UK over the 1999-2010 period explicitly modelling the effect of the 2008-10 recession. Identification of invoking a NMW is possible by reference to a pre-period (prior to 1999) without a NMW. Separate identification of the effect of incremental changes (and year interaction effects) in the NMW is facilitated by variation in the bite of the NMW across local labour markets. We address the issues of: possible endogeneity and dynamic structure of employment rate changes; regional demand side shocks induced by the recession; and take account of the spatial dependence of local labour markets. Using System GMM we conclude that there is no discernable effect of the NMW introduction or its uprating on employment but show how more naïve estimation may have revealed the various widely different positive and negative effects found in the literature." (Author's abstract, IAB-Doku) ((en))

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Riley, Rebecca & Chiara Rosazza Bondibene (2015): Raising the standard. Minimum wages and firm productivity. (NIESR discussion paper 449), London, 35 S.

Abstract

"This paper exploits the introduction of the National Minimum Wage (NMW) in Britain and subsequent increases in the NMW to identify the effects of minimum wages on productivity. We find that the NMW increased average labour costs for companies that tend to employ low paid workers, both upon the introduction of the NMW and more recently following the Great Recession when many workers experienced pay freezes or wage cuts, but the NMW continued to rise. We find evidence to suggest that companies responded to these increases in labour costs by raising labour productivity. These labour productivity changes did not come about via a reduction in firms' workforce or via capital-labour substitution. Rather they were associated with increases in total factor productivity, consistent with organisational change, training and efficiency wage responses to increased labour costs from minimum wages." (Author's abstract, IAB-Doku) ((en))

Abstract

"This report reviews the National Minimum Wage (NMW) including the state of the economy and the labour market and the operation of the NMW. It makes recommendations for the level of each of the different rates of the NMW which the Low Pay Commission (LPC) believes should apply from October 2015.
The government had also asked us to consider whether any changes can be made to the Apprentice Rate to make the structure simpler and improve compliance and whether the structure and level of the Apprentice Rate should continue to be applied to all levels of apprenticeship, including higher levels; Our recommendation on this is given in chapter 4 'Review of the Structure of the Apprentice Rate' of the report." (Author's abstract, IAB-Doku) ((en))

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Dickens, Richard, Rebecca Riley & David Wilkinson (2014): The UK minimum wage at 22 years of age. A regression discontinuity approach. In: Journal of the Royal Statistical Society. Series A, Statistics in Society, Jg. 177, H. 1, S. 95-114. DOI:10.1111/rssa.12003

Abstract

"A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK national minimum wage that occurs at age 22 years on various labour market outcomes. Using data from the Labour Force Survey we find an increase of 3 - 4 percentage points in the rate of employment of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the national minimum wage was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Papps, Kerry (2014): Career wage profiles and the minimum wage. (IZA discussion paper 8421), Bonn, 21 S.

Abstract

"A model of on-the-job training in the presence of a minimum wage is presented. This predicts that the minimum wage will have a negative effect on a worker's subsequent wage growth when the labour market is competitive but a U-shaped effect when it is not competitive. This prediction is then tested using data from the Annual Survey of Hours and Earnings in the United Kingdom. Workers who were affected by the minimum wage before age 22 are found to have significantly lower wage growth later in life than others, but only if they worked on jobs that were not covered by a collective labour agreement. Evidence suggests that this difference in wage growth reflects differences in productivity between workers. The results reconcile previous theoretical predictions by Becker and Acemoglu and Pischke." (Author's abstract, IAB-Doku) ((en))

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Fidrmuc, Jan & J. D. Tena (2013): National minimum wage and employment of young workers in the UK. (CESifo working paper 4286), München, 30 S.

Abstract

"We analyze the impact of the UK national minimum wage (NMW) on the employment of young workers. The previous literature found little evidence of an adverse impact of the NMW on the UK labor market. We focus on the age-related increases in the NMW at 18 and 22 years of age. Using regression discontinuity design, we fail to find any effect of turning 22. However, we find a significant and negative employment effect for male workers at 21, which we believe to be an anticipation effect. We also find a negative effect for both genders upon turning 18. The age-related NMW increases may have an adverse effect on employment of young workers, with this effect possibly occurring already well in advance of reaching the threshold age." (Author's abstract, IAB-Doku) ((en))

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Hoffeld, Wolfgang (2013): Mindestlöhne und X-Effizienz. (International vergleichende Schriften zur Personalökonomie und Arbeitspolitik 22), München: Hampp, 165 S.

Abstract

"Über das Für und Wider gesetzlicher Mindestlöhne wird seit jeher sowohl auf politischer als auch auf wissenschaftlicher Ebene intensiv diskutiert. Für die Kritiker eines gesetzlichen Mindestlohnes stellt der potenzielle Anstieg der Arbeitslosigkeit das Hauptargument gegen gesetzlich vorgeschriebene Lohnuntergrenzen dar. Allerdings deutet die empirische Evidenz der vergangenen Jahre immer seltener auf den intuitiv zu erwartenden negativen Zusammenhang zwischen Mindestlöhnen und Beschäftigung hin. Insbesondere konnten bislang keine substanziellen negativen Effekte der Mindestlohneinführung in Großbritannien im Jahr 1999 identifiziert werden. Im Vordergrund der Untersuchung steht die Hypothese, dass die Mindestlohneinführung in Großbritannien zu einer Erhöhung der Effizienz in der Produktion der stärker betroffenen Unternehmen geführt hat. Diese Hypothese stützt sich auf das sogenannte 'Schock-Argument' des Mindestlohnes, wonach eine Mindestlohneinführung oder eine Mindestlohnerhöhung als exogener Schock für die betroffenen Unternehmen interpretiert wird. Anhand von Unternehmensdaten aus der Datenbank FAME sowie eines speziellen Datensatzes zur Branche der britischen Pflegeheime wird die Frage nach einer effizienzsteigernden Wirkung der Mindestlohneinführung in Großbritannien mithilfe der Data-Envelopment-Analyse untersucht, die erstmals in diesem Kontext angewendet wird. Die Ergebnisse lassen auf einen positiven Einfluss des Mindestlohnes auf die Effizienz der betroffenen Unternehmen schließen. Die Arbeit leistet somit einen wesentlichen Beitrag zur Erklärung des Phänomens beschäftigungsneutraler bindender Mindestlöhne." (Autorenreferat, IAB-Doku)

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Jones, M. K., R. J. Jones, P. L. Latreille, P. D. Murphy & P. J. Sloane (2013): A regional analysis of flows into and out of the UK National Minimum Wage. In: Applied Economics, Jg. 45, H. 21, S. 3074-3087. DOI:10.1080/00036846.2012.695069

Abstract

"This article utilizes the panel element of the UK Labour Force Survey (LFS) to identify for individual regions total inflows and outflows and hazards for those individuals paid at or below the National Minimum Wage (NMW). In particular, it examines the extent and direction of the correlation between low-pay inflows and outflows and the economic cycle. Further, it examines the impact of regional variations in the bite of the NMW on regional flows into and out of the NMW." (Author's abstract, IAB-Doku) ((en))

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Manning, Alan (2013): Minimum wages: A view from the UK. In: Perspektiven der Wirtschaftspolitik, Jg. 14, H. 1/2, S. 57-66. DOI:10.1111/pers.12004

Abstract

"In the past economists were generally hostile to the idea of a minimum wage regarding those who supported the policy as being economically illiterate. But the balance of professional opinion has also shifted. In this article I will describe the evidence that has led to this position, largely seen through the experience of the UK with the introduction of its National Minimum Wage (NMW) in 1999. The article will set out a brief history of minimum wages in the UK, then summarize the evidence on the impact of the NMW on employment and wage inequality and then briefly describe the lessons that might be learned for Germany." (Text excerpt, IAB-Doku) ((en))

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Riley, Rebecca (2013): Modelling demand for low skilled/low paid labour. Exploring the employment trade-offs of a living wage. (NIESR discussion paper 404), London, 37 S.

Abstract

"This paper analyses labour demand for low skill/low pay labour in order to explore the potential employment trade-offs associated with moving to a Living Wage. Using industry sector panel data we model demand for labour classified into 5 groups defined by age and highest educational qualification. Low pay is most prevalent amongst the less skilled and the young. Amongst the 11 market sector industry groups we consider, the three sectors that would face the largest rise in their wage bill were all employers to sign up to the Living Wage are: Wholesale & Retail, Hotels & Catering; Other Community, Social & Personal Services; and less skill intensive manufacturing industries. Our calculations suggest that, conditional on the level of output and worker effort, these cost increases would reduce employers' demand for young low-skilled employees in the private sector by approximately 300,000. The analysis highlights the importance of allowing for labour substitution in considering the employment demand effects of exogenous shifts in wages. We find that in aggregate the reduction in conditional labour demand with the Living Wage is around 160,000; this is around half the reduction in the demand for young lower-skilled employees because employers substitute younger with more experienced workers. The number of employees who would see their earnings rise with a Living Wage far outweighs the estimated reduction in labour demand." (Author's abstract, IAB-Doku) ((en))

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Butcher, Tim, Richard Dickens & Alan Manning (2012): Minimum wages and wage inequality. Some theory and an application to the UK. (CEP discussion paper 1177), London, 33 S.

Abstract

"Research suggests that, at the levels set in countries like the US and the UK, minimum wages have little effect on employment but do have impacts on wage inequality. However we lack models that can explain these facts - this paper presents one based on imperfect labour markets. The paper also investigates the impact of the UK's National Minimum Wage on wage inequality finding it can explain a sizeable part of the evolution of wage inequality in the bottom half of the distribution in the period 1998-2010. We also present evidence that the impact of the NMW reaches up to 40% above the NMW in 2010 which corresponds to the 25th percentile. These spillovers are larger in low-wage segments." (Author's abstract, IAB-Doku) ((en))

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Butcher, Tim (2012): Still evidence-based? The role of policy evaluation in recession and beyond: the case of the National Minimum Wage. In: National Institute Economic Review, Jg. 219, H. 1, S. R26-R40. DOI:10.1177/002795011221900104

Abstract

"This article explains the role of evidence in determining the recommendations made by the Low Pay Commission (LPC) for the National Minimum Wage (NMW). First, it sets out the process of recommending the minimum wage including the role of evidence. Second, it summarises the evidence available on the impact of the minimum wage before discussing how that evidence has informed the recommendations for the adult rate of the minimum wage in the LPC's reports. It concludes by assessing the extent to which the NMW might be regarded as a success and considers whether the recent financial crisis will alter the evidence-based approach so far adopted by the LPC." (Author's abstract, IAB-Doku) ((en))

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Dolton, Peter, Chiara Rosazza-Bondibene & Jonathan Wadsworth (2012): Employment, inequality and the UK National Minimum Wage over the medium-term. In: Oxford Bulletin of Economics and Statistics, Jg. 74, H. 1, S. 78-106. DOI:10.1111/j.1468-0084.2011.00653.x

Abstract

"We assess the impact of the national minimum wage (NMW) on employment and inequality in the UK over the decade since its introduction. We evaluate its effects in each year, using an incremental differences-in-differences (IDiD) estimator. Identification is based on variation in the bite of the NMW across local labour markets and the different sized year on year up-ratings. We find that an increased bite of the NMW is associated with falls in lower tail wage inequality. While the average employment effect over the entire period is broadly neutral, there are small but significant positive NMW effects from 2003 onwards." (Author's abstract, IAB-Doku) ((en))

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Dolton, Peter, Chiara Rosazza Bondibene & Michael Stops (2012): The spatial analysis of the employment effect of the minimum wage in a recession. The case of the UK 1999-2010. (Research reports commissioned for the Low Pay Commission Report 2012), London, 61 S.

Abstract

"This report assesses the impact of the National Minimum Wage (NMW) on employment in the UK over the 1999-2010 period explicitly modelling the effect of the 2008-10 recession. Identification is facilitated by using variation in the bite of the NMW across local labour markets with the use of the 'incremental differences-in-differences' (IDiD) estimator. We explicitly take account of the spatial nature of local labour markets by using commuting patterns to weight our estimation. We find that, even controlling for clear regional recessionary factors, there are small positive employment effects of the NMW from 2003-6, when the average bite of the NMW was at its highest since its introduction." (Author's abstract, IAB-Doku) ((en))

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Stewart, Mark B. (2012): Wage inequality, minimum wage effects, and spillovers. In: Oxford economic papers, Jg. 64, H. 4, S. 616-634. DOI:10.1093/oep/gps003

Abstract

"This paper investigates possible spillover effects of the UK minimum wage. The halt in the growth in inequality in the lower half of the wage distribution (as measured by the 50:10 percentile ratio) since the mid-1990s, in contrast to the continued inequality growth in the upper half of the distribution, suggests the possibility of a minimum wage effect and spillover effects on wages above the minimum. This paper analyses individual wage changes, using both a difference-in-differences estimator and a specification involving comparisons across minimum wage upratings, and concludes that there have not been minimum wage spillovers. Since the UK minimum wage has always been below the 10th percentile, this lack of spillovers implies that minimum wage changes have not had an effect on the 50:10 percentile ratio measure of inequality in the lower half of the wage distribution." (Author's abstract, IAB-Doku) ((en))

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Ven, Justin van de (2012): Implications of the National Employment Savings Trust for vulnerable sectors of the UK labour market. A reduced-form statistical evaluation. In: National Institute Economic Review, Jg. 219, H. 1, S. R77-R89. DOI:10.1177/002795011221900108

Abstract

"The National Employment Savings Trust (NEST) is a new pension scheme that will be introduced for employees on modest incomes in the UK from 2012. This paper draws out the implications of the NEST, focusing upon low-paid employees and their employers using data from the Annual Survey of Hours and Earnings. The results suggest that the NEST will increase labour costs by between 0.6 and 0.8 per cent on average, and have a disproportionate effect on low pay industries and private sector firms employing fewer than 25 employees. The analysis highlights the potential role of the minimum wage to shield low pay workers from paying a share of the subsidies that the NEST will afford to its members." (Author's abstract, IAB-Doku) ((en))

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Dickens, Richard, Rebecca Riley & David Wilkinson (2011): The UK minimum wage at age 22. A regression discontinuity approach. (NIESR discussion paper 378), London, 37 S.

Abstract

"A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK National Minimum Wage (NMW) that occurs at age 22 on various labour market outcomes. Using data from the Labour Force Survey we find a 2-4% point increase in the employment rate of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the NMW was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests." (Author's abstract, IAB-Doku) ((en))

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Draca, Mirko, Stephen Machin & John Van Reenen (2011): Minimum wages and firm profitability. In: American Economic Journal. Applied Economics, Jg. 3, H. 1, S. 129-151. DOI:10.1257/app.3.1.129

Abstract

Obwohl es eine umfangreiche Literatur zu den ökonomischen Auswirkungen von Mindestlöhnen auf die Arbeitsmarktlage (speziell die Beschäftigung) gibt, existieren kaum Belege für ihre Auswirkungen auf die Leistungsfähigkeit von Unternehmen. Das ist überraschend, da Mindestlöhne einen signifikanten Einfluss auf die Löhne auszuüben scheinen, aber nur einen geringen Einfluss auf die Anzahl der Stellen, so dass es natürlich ist, sich vorzustellen, dass ein stärkerer Einfluss auf andere Aspekte des Unternehmensverhaltens existieren muss. Der Beitrag befasst sich mit dem Einfluss von Mindestlöhnen auf die Rentabilität von Unternehmen unter Auswertung der Entwicklung nach Einführung eines Mindestlohns auf dem britischen Arbeitsmarkt im Jahre 1999. Es werden Informationen aus dem vorpolitischen Raum zur Einkommensverteilung genutzt, um Behandlungs- und Vergleichsgruppen zu konstruieren und einen Difference-in-Differences-Ansatz zu implementieren. Es wird gezeigt, dass durch die Einführung des Mindestlohns die Unternehmensrentabilität signifikant reduziert wurde (und die Löhne signifikant stiegen). Dies ergibt sich aus getrennten Analysen zweier unterschiedlicher Arten von Paneldaten auf der Unternehmensebene, einmal von Unternehmen der ambulanten Altenpflege, die den Niedriglohnsektor repräsentieren, und zum zweiten von Unternehmen quer durch alle Wirtschaftszweige. Interessanterweise gibt es keinen Hinweis darauf, dass die Senkung der Rentabilität ein Anwachsen der Unternehmensinsolvenzen zur Folge hatte. In diesem Sinne werden die Ergebnisse als Umverteilung von Quasi-Erträgen hin zu den niedrig bezahlten Beschäftigten interpretiert. (IAB)

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Dolton, Peter, Chiara Rosazza-Bondibene & Jonathan Wadsworth (2010): Employment, inequality and the UK National Minimum Wage over the medium-term. (CEP discussion paper 1007), London, 33 S.

Abstract

"This paper assesses the impact of the National Minimum Wage (NMW) on employment and inequality in the UK over the decade since its introduction in 1999. Identification is facilitated by using variation in the bite of the NMW across local labour markets and the different sized year on year up ratings of the NMW. We use an 'incremental differences-in-differences' (IDiD) estimator which allows us to estimate the effects of the NMW in each year since its introduction. We find that an increased bite of the NMW is associated with falls in lower tail wage inequality. Moreover, while the average employment effect of the NMW over the entire period is broadly neutral, there are small but significant positive employment estimates from 2003 onward, when the average bite of the NMW was at its highest since its introduction." (Author's abstract, IAB-Doku) ((en))