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The Employment Effects of the October 2003 Increase in the National Minimum Wage

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Author Info
Richard Dickens
Mirko Draca
Abstract

There is a growing body of research that measures employment effects of the minimum wageby using longitudinal data on individuals to compare job loss of workers affected by aminimum wage increase with those who are not directly affected. This sort of study requiresgood quality wage data in order to clearly identify these treatment and control groups. Muchof the evidence on the impact of the UK minimum wage uses this technique with poor qualitywage data. This paper examines the impact of the October 2003 increase in the NationalMinimum Wage (NMW) using a much better measure of the wage. We find insignificantnegative effects on the employment retention rates of all adults and, most notably, maleworkers. Analysis of the probability of employment retention across different hourly wagerates also show how sensitive this methodology can be to different definitions of thetreatment and control group.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0693.

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Date of creation: Jun 2005
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Handle: RePEc:cep:cepdps:dp0693

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Related research
Keywords: Minimum Wages; Employment Transitions; Wages;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs

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  1. Machin, Stephen & Alan Manning & Lupin Rahman, 2003. "Where Minimum Wage Bites Hard: The Introduction of the UK National Minimum Wage to a Low Wage Sector," Royal Economic Society Annual Conference 2003 145, Royal Economic Society. [Downloadable!]
  2. Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, 03. [Downloadable!] (restricted)
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  3. Linneman, Peter, 1982. "The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 443-69, June. [Downloadable!] (restricted)
  4. Richard Dickens & Alan Manning, 2002. "Has The National Minimum Wage Reduced UK Wage Inequality?," CEP Discussion Papers dp0533, Centre for Economic Performance, LSE. [Downloadable!]
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  5. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages C110-C116, 03. [Downloadable!] (restricted)
  6. Mark B. Stewart, 2002. "Estimating the Impact of the Minimum Wage Using Geographical Wage Variation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(s1), pages 583-605, 08. [Downloadable!] (restricted)
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  7. Kramarz, Francis & Philippon, Thomas, 2001. "The impact of differential payroll tax subsidies on minimum wage employment," Journal of Public Economics, Elsevier, vol. 82(1), pages 115-146, October. [Downloadable!] (restricted)
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  8. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
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