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The UK Minimum Wage at Age 22: A Regression Discontinuity Approach

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Author Info

  • Richard Dickens

    ()
    (Department of Economics, University of Sussex
    Centre for Economic Performance, London School of Economics)

  • Rebecca Riley

    ()
    (National Institute of Economic and Social Research
    LLAKES, Institute of Education)

  • David Wilkinson

    ()
    (National Institute of Economic and Social Research)

Abstract

A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK National Minimum Wage (NMW) that occurs at age 22 on various labour market outcomes. Using data from the Labour Force Survey we find a 2- 4% point increase in the employment rate of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the NMW was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests.

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File URL: http://www.sussex.ac.uk/economics/documents/wps-21-2011.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Sussex in its series Working Paper Series with number 2111.

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Date of creation: Mar 2011
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Handle: RePEc:sus:susewp:2111

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Keywords: Minimum Wage Legislation; Low Wage;

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  1. David Card & Carlos Dobkin & Nicole Maestas, 2007. "Does Medicare Save Lives?," NBER Working Papers 13668, National Bureau of Economic Research, Inc.
  2. 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, Royal Economic Society 169, Royal Economic Society.
  3. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, Econometric Society, vol. 69(1), pages 201-09, January.
  4. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
  5. Richard Dickens & Alan Manning, 2002. "Has The National Minimum Wage Reduced UK Wage Inequality?," CEP Discussion Papers dp0533, Centre for Economic Performance, LSE.
  6. 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, University of Chicago Press, vol. 17(1), pages 1-22, January.
  7. Thomas Lemieux & Kevin Milligan, 2004. "Incentive Effects of Social Assistance: A Regression Discontinuity Approach," NBER Working Papers 10541, National Bureau of Economic Research, Inc.
  8. David S. Lee & David Card, 2006. "Regression Discontinuity Inference with Specification Error," NBER Technical Working Papers 0322, National Bureau of Economic Research, Inc.
  9. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
  10. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, Elsevier, vol. 32(3), pages 385-397, August.
  11. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers 0337, National Bureau of Economic Research, Inc.
  12. 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, University of Chicago Press, vol. 90(3), pages 443-69, June.
  13. 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.
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  1. The UK Minimum Wage at Age 22: A Regression Discontinuity Approach
    by maximorossi in NEP-LTV blog on 2011-07-28 21:21:20
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Cited by:
  1. Tim Butcher & Richard Dickens & Alan Manning, 2012. "Minimum wages and wage inequality: some theory and an application to the UK," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 48937, London School of Economics and Political Science, LSE Library.

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