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Estimating the Impact of the Minimum Wage Using Geographical Wage Variation*


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    The author is grateful to the ESRC (under award R000223440) for financial support and to two anonymous referees for useful comments. The NES and ABI data were provided by the Office for National Statistics. The LFS Local Area data were provided via the Data Archive.


This paper evaluates the impact on employment of the UK's introduction of a minimum wage in 1999 by exploiting the geographical variation in wages, which meant that the minimum wage's ‘bite’ into an area's wage distribution differed considerably across the country. The results indicate that, although the minimum wage had differential wage-distribution effects across the 140 areas of the country, employment growth after its introduction was not significantly lower in areas of the country with a high proportion of low-wage workers, whose wages had to be raised to comply, from that in areas with a low proportion of such workers.

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