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Work-related training and the new National Minimum Wage in Britain -ISER Working Paper-

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  • L. Bryan, Mark
  • L. Booth, Alison
  • Arulampalam, Wiji

Abstract

In this paper we use important new training and wage data from the British Household Panel Survey to estimate the impact of the national minimum wage (introduced in April 1999) on the work-related training of low-wage workers. We use two 'treatment groups' for estimating the impact of the new minimum wage - those workers who explicitly stated they were affected by the new minimum and those workers whose derived 1998 wages were below the minimum. Using difference-in-differences techniques for the period 1998 to 2000, we find no evidence that the introduction of the minimum wage reduced the training of affected workers, and some evidence that it increased it. In particular we find a significant positive effect of about 8 to 11% for affected workers. Consequently our findings can be interpreted as providing no evidence in support of the orthodox human capital model as it applies to work-related training, and some evidence in support of the new theories based on imperfectly competitive labour markets. Our estimates also suggest that two of the goals of the UK government - improving wages of the low paid and developing their skills - have been compatible, at least for the introductory rates of the national minimum wage.

Suggested Citation

  • L. Bryan, Mark & L. Booth, Alison & Arulampalam, Wiji, 2003. "Work-related training and the new National Minimum Wage in Britain -ISER Working Paper-," ISER Working Paper Series 2003-05, Institute for Social and Economic Research.
    • Handle: RePEc:ese:iserwp:2003-05
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    References listed on IDEAS

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    Cited by:

    1. Jörn-Steffen Pischke, 2004. "Labor Market Institutions, Wages and Investment," CEP Discussion Papers dp0652, Centre for Economic Performance, LSE.
    2. Kyota Eguchi, 2010. "Minimum Wages and Trainers' Dilemma," LABOUR, CEIS, vol. 24(2), pages 128-138, June.
    3. Christian Dustmann & Uta Schönberg, 2009. "Training and Union Wages," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 363-376, May.
    4. Alison Booth & Mark L. Bryan, 2006. "Training, Minimum Wages and the Earnings Distribution," CEPR Discussion Papers 537, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    5. Eguchi, Kyota, 2004. "Minimum wages enhancing trainers’ incentives," ISER Working Paper Series 2004-18, Institute for Social and Economic Research.
    6. Almeida, Rita K. & Aterido, Reyes, 2011. "On-the-job training and rigidity of employment protection in the developing world: Evidence from differential enforcement," Labour Economics, Elsevier, vol. 18(S1), pages 71-82.

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