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The Dynamics of the National Minimum Wage: Transitions Between Different Labour Market States

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Author Info
Melanie K. Jones (WELMERC, University of Wales Swansea)
Richard J. Jones (WELMERC, University of Wales Swansea)
Philip D. Murphy (WELMERC, University of Wales Swansea)
Peter J. Sloane () (WELMERC, University of Wales Swansea and IZA Bonn)

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Abstract

An important policy issue is whether the National Minimum Wage (NMW) introduced in Britain in April 1999, is a stepping stone to higher wages or traps workers in a low-wage – nowage cycle. In this paper we utilise the longitudinal element of the Labour Force Survey over the period 1999 to 2003 to model transitions between different labour market states – payment at or below the NMW, above the NMW, unemployment and inactivity, using a multinomial logit approach. It appears that for many workers payment at or below the NMW is of relatively short duration and a substantial number move into higher paid jobs.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1690.

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Length: 41 pages
Date of creation: Jul 2005
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Handle: RePEc:iza:izadps:dp1690

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Related research
Keywords: national minimum wage transitions steady state distributions

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Find related papers by JEL classification:
J0 - Labor and Demographic Economics - - General
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David Neumark & Olena Nizalova, 2004. "Minimum Wage Effects in the Longer Run," NBER Working Papers 10656, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004. "Training and the new minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages C87-C94, 03. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Agne Lauzadyte, 2007. "A Statistical Programme Assignment Model," Economics Working Papers 2007-18, School of Economics and Management, University of Aarhus. [Downloadable!]
  2. Arne Uhlendorff, 2006. "From No Pay to Low Pay and Back Again? A Multi-State Model of Low Pay Dynamics," IZA Discussion Papers 2482, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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