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The Effects of Statutory Minimum Rates of Pay on Employment in Great Britain

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  • Kaufman, Roger T

Abstract

Estimates of the employment effects of statutory minimum rates of pay are derived for Great Britain. Using a constant elasticity of substitution production function, the author estimates the partial elasticities of substitution in those industries covered by statutory minimum rates to be between 0.45 and 0.85. He then develops a bargaining model and estimates that the elasticity of the average wage rate in these industries with respect to the statutory minimum rate is zero for men and between 0.07 and 0.15 for women. Combining these estimates yields -0.06 as the approximate total employment elasticity of statutory minimum rates. Copyright 1989 by Royal Economic Society.

Suggested Citation

  • Kaufman, Roger T, 1989. "The Effects of Statutory Minimum Rates of Pay on Employment in Great Britain," Economic Journal, Royal Economic Society, vol. 99(398), pages 1040-1053, December.
    • Handle: RePEc:ecj:econjl:v:99:y:1989:i:398:p:1040-53
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    Cited by:

    1. Dickens, Richard & Machin, Stephen & Manning, Alan, 1998. "Estimating the effect of minimum wages on employment from the distribution of wages: A critical view," Labour Economics, Elsevier, vol. 5(2), pages 109-134, June.
    2. Pierre Cahuc & Philippe Michel, 1995. "Salaire minimum, croissance et bien-être," Revue Économique, Programme National Persée, vol. 46(3), pages 585-594.
    3. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
    4. Teresa Ghilarducci & Michael Papadopoulos & Siavash Radpour, 2017. "Relative Wages in Aging America: The Baby Boomer Effect," SCEPA working paper series. 2017-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    5. Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 1-22, January.
    6. Richard Dickens & Paul Gregg & Stephen Machin & Alan Manning & Jonathan Wadsworth, 1993. "Wages Councils: Was There a Case for Abolition?," British Journal of Industrial Relations, London School of Economics, vol. 31(4), pages 515-529, December.
    7. Richard Dickens & Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Employment: Theory and Evidence from the US," NBER Working Papers 4742, National Bureau of Economic Research, Inc.
    8. Dessing, Maryke, 2004. "Implications for minimum-wage policies of an S-shaped labor-supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 543-568, April.
    9. Judith Sloan, 1996. "Believe It or Not: New Evidence on the Effects of Minimum Wages," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 3(1), pages 121-126.
    10. Daniel Cardona & Fernando Sanchez Losada, 2003. "Union Power, Minimum Wage Legislation, Endogenous Labor Supplies and Production," Working Papers in Economics 105, Universitat de Barcelona. Espai de Recerca en Economia.
    11. Daniel Cardona & Fernando Sánchez-Losada, 2006. "Unions, qualification choice, and output," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 50-76, January.

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