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Minimum Wages and Schooling: Evidence from the UK s Introduction of a National Minimum Wage

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  • Patricia Rice

Abstract

This paper uses the introduction of the national minimum wage in the UK in April 1999 as a 'natural experiment' to analyse the impact of minimum wages on enrolment in schooling. At the time of its introduction, only workers aged 18 years or more were covered by the legislation. The paper uses panel data for a sample of young people in a given school-year cohort, some of whom were aged 18 years in spring 1999 and therefore eligible to receive the national minimum wage, and others who were aged only 17 years. We compare participation in post-compulsory schooling for the two groups, both before and after the enactment of the legislation and find robust evidence that eligibility for the national minimum wage significantly reduces the probability of participation in post-compulsory schooling for young people living in areas where the national minimum is high relative to local earnings.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0050.

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Date of creation: May 2010
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Handle: RePEc:cep:sercdp:0050

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: minimum wages; enrolment in schooling; natural experiment approach;

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  1. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
  2. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
  3. Kelly Bedard & Elizabeth Dhuey, 2006. "The Persistence of Early Childhood Maturity: International Evidence of Long-Run Age Effects," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1437-1472, November.
  4. Mark Turner & Berna Demiralp, 2001. "Do higher minimum wages harm minority and inner-city teens?," The Review of Black Political Economy, Springer, vol. 28(4), pages 95-116, June.
  5. Stewart, Mark B., 2002. "The Impact of the Introduction of the UK Minimum Wage on the Employment Probabilities of Low Wage Workers," Royal Economic Society Annual Conference 2002 169, Royal Economic Society.
  6. David Neumark & William Wascher, 1995. "Minimum wage effects on school and work transitions of teenagers," Finance and Economics Discussion Series 95-7, Board of Governors of the Federal Reserve System (U.S.).
  7. 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.
  8. Michele Campolieti & Tony Fang & Morley Gunderson, 2003. "How Minimum Wages Affect Schooling-Employment Outcomes in Canada, 1993-1999," Journal of Labor Research, Transaction Publishers, vol. 26(3), pages 533-545, August.
  9. Stewart, Mark B. & Swaffield, Joanna K., 2006. "The other margin : do minimum wages cause working hours adjustments for low-wage workers?," The Warwick Economics Research Paper Series (TWERPS) 746, University of Warwick, Department of Economics.
  10. Hyslop, Dean & Stillman, Steven, 2004. "Youth Minimum Wage Reform and the Labour Market," IZA Discussion Papers 1091, Institute for the Study of Labor (IZA).
  11. Neumark, David & Wascher, William, 2003. "Minimum wages and skill acquisition: another look at schooling effects," Economics of Education Review, Elsevier, vol. 22(1), pages 1-10, February.
  12. Chaplin, Duncan D. & Turner, Mark D. & Pape, Andreas D., 2003. "Minimum wages and school enrollment of teenagers: a look at the 1990's," Economics of Education Review, Elsevier, vol. 22(1), pages 11-21, February.
  13. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April.
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