The authors wish to thank the Low Pay Commission for funding this project – although we remain responsible for its contents. We also wish to thank seminar participants at the LPC, LSE, Aberdeen University, NIESR and two anonymous referees for many useful comments.
Employment, Inequality and the UK National Minimum Wage over the Medium-Term*
Article first published online: 3 AUG 2011
© Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2011
Oxford Bulletin of Economics and Statistics
Volume 74, Issue 1, pages 78–106, February 2012
How to Cite
Dolton, P., Bondibene, C. R. and Wadsworth, J. (2012), Employment, Inequality and the UK National Minimum Wage over the Medium-Term. Oxford Bulletin of Economics and Statistics, 74: 78–106. doi: 10.1111/j.1468-0084.2011.00653.x
- Issue published online: 4 JAN 2012
- Article first published online: 3 AUG 2011
- Final Manuscript Received: December 2010
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.