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The UK minimum wage at 22 years of age: a regression discontinuity approach

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  • Richard Dickens
  • Rebecca Riley
  • David Wilkinson

Abstract

type="main" xml:id="rssa12003-abs-0001"> 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.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:jorssa:v:177:y:2014:i:1:p:95-114
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    File URL: http://hdl.handle.net/10.1111/rssa.2013.177.issue-1
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    Cited by:

    1. Claus Thustrup Kreiner & Daniel Reck & Peer Ebbesen Skov, 2020. "Do Lower Minimum Wages for Young Workers Raise Their Employment? Evidence from a Danish Discontinuity," The Review of Economics and Statistics, MIT Press, vol. 102(2), pages 339-354, May.
    2. Piza, Caio & Souza, André Portela Fernandes de, 2016. "Short and long-term effects of a child-labor ban," Textos para discussão 428, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    3. Fidrmuc, Jan & Tena, J. D., 2018. "UK national minimum wage and labor market outcomes of young workers," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-28.
    4. 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.
    5. Nicolás Francisco Abbate & Bruno Jimnez, 2022. "Do Minimum Wage Hikes Lead to Employment Destruction? Evidence from a Regression Discontinuity Design in Argentina," Asociación Argentina de Economía Política: Working Papers 4533, Asociación Argentina de Economía Política.
    6. Maria Marimpi & Pierre Koning, 2018. "Youth minimum wages and youth employment," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-18, December.
    7. Lateef Akanni & Otto Lenhart & Alec Morton, "undated". "Conflicting economic policies and mental health: evidence from the UK national living wage and benefits freeze," Working Papers 22-10, University of Strathclyde Business School, Department of Economics.
    8. Bargain, Olivier & Doorley, Karina & Van Kerm, Philippe, 2018. "Minimum Wages and the Gender Gap in Pay: New Evidence from the UK and Ireland," IZA Discussion Papers 11502, Institute of Labor Economics (IZA).
    9. Meltem Dayioglu & Müşerref Küçükbayrak & Semih Tumen, 2022. "The impact of age-specific minimum wages on youth employment and education: a regression discontinuity analysis," International Journal of Manpower, Emerald Group Publishing Limited, vol. 43(6), pages 1352-1377, March.
    10. Kabátek, Jan, 2015. "Happy Birthday, You're Fired! The Effects of Age-Dependent Minimum Wage on Youth Employment Flows in the Netherlands," IZA Discussion Papers 9528, Institute of Labor Economics (IZA).
    11. Jacob Maxwell & Robert Pryce & Luke B. Wilson, 2022. "The impact of increasing the United Kingdom national minimum wage on self‐reported health," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1167-1183, June.
    12. Sotomayor, Orlando J., 2021. "Can the minimum wage reduce poverty and inequality in the developing world? Evidence from Brazil," World Development, Elsevier, vol. 138(C).
    13. Wiljan van den Berge, 2021. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," CPB Discussion Paper 422.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Jan Fidrmuc & Juan D. Tena, 2019. "Minimum Wage and Young Workers: UK Evidence," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 19-22, January.
    15. repec:ces:ifodic:v:16:y:2019:i:4:p:50000000004803 is not listed on IDEAS
    16. Nidhiya Menon & Yana van der Meulen Rodgers, 2017. "The Impact of the Minimum Wage on Male and Female Employment and Earnings in India," Asian Development Review, MIT Press, vol. 34(1), pages 28-64, March.
    17. Wiljan van den Berge & Emiel van Bezooijen & Anna Salomons, 2021. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," CPB Discussion Paper 422, CPB Netherlands Bureau for Economic Policy Analysis.
    18. 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 565-640, June.
    19. Jin-young Choi & Myoung-jae Lee, 2017. "Regression discontinuity: review with extensions," Statistical Papers, Springer, vol. 58(4), pages 1217-1246, December.
    20. Mazzutti, Caio Cícero Toledo Piza da Costa, 2016. "Three essays on the causal impacts of child labour laws in Brazil," Economics PhD Theses 0616, Department of Economics, University of Sussex Business School.
    21. 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.
    22. Nicolás Abbate & Bruno Jiménez, 2023. "Do Minimum Wage Hikes Lead to Employment Destruction? Evidence from a Regression Discontinuity Design in Argentina," CEDLAS, Working Papers 0310, CEDLAS, Universidad Nacional de La Plata.
    23. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2015. "Zukunftsfähigkeit in den Mittelpunkt. Jahresgutachten 2015/16 [Focus on Future Viability. Annual Report 2015/16]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201516.
    24. 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, June.

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