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The other margin : do minimum wages cause working hours adjustments for low-wage workers?

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Author Info

  • Stewart, Mark B.

    (Department of Economics, University of Warwick)

  • Swaffield, Joanna K.

    (Department of Economics, University of York)

Abstract

This paper estimates the impact of the introduction of the UK minimum wage on the working hours of low-wage employees using difference-in-differences estimators. The estimates using the employer-based New Earnings Surveys indicate that the introduction of the minimum wage reduced the basic hours of low-wage workers by between 1 and 2 hours per week. The effects on total paid hours are similar (indicating negligible effects on paid overtime) and lagged effects dominate the smaller and less significant initial effects within this. Estimates using the employee-based Labour Force Surveys are typically less significant.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp_746.pdf
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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 746.

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Length: 33 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:wrk:warwec:746

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Keywords: minimum wages ; working hours ; labour demand ; difference-in-differences estimator;

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References

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  1. Neumark, D. & Schweitzer, M. & Wascher, W., 1999. "The Effect of Minimum Wages Throughout the Wage Distribution," Papers 9919, London School of Economics - Centre for Labour Economics.
  2. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
  3. Sara Connolly & Mary Gregory, 2002. "The National Minimum Wage and Hours of Work: Implications for Low Paid Women," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(s1), pages 607-631, 08.
  4. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
  5. 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.
  6. Skinner, Chris, et al, 2002. " The Measurement of Low Pay in the UK Labour Force Survey," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(0), pages 653-76, Supplemen.
  7. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
  8. 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.
  9. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier.
  10. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
  11. Chris Skinner & Nigel Stuttard & Gabriele Beissel-Durrant & James Jenkins, 2002. "The Measurement of Low Pay in the UK Labour Force Survey," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(s1), pages 653-676, 08.
  12. 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.
  13. Stewart, Mark B & Swaffield, Joanna K, 2002. " Using the BHPS Wave 9 Additional Questions to Evaluate the Impact of the National Minimum Wage," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(0), pages 633-52, Supplemen.
  14. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  15. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626.
  16. Richard Dickens & Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," CEP Discussion Papers dp0183, Centre for Economic Performance, LSE.
  17. 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.
  18. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages C110-C116, 03.
  19. Richard Dickens & Alan Manning, 2004. "Spikes and spill-overs: The impact of the national minimum wage on the wage distribution in a low-wage sector," Economic Journal, Royal Economic Society, vol. 114(494), pages C95-C101, 03.
  20. Dickens, Richard & Alan Manning, 2003. "The Impact of the National Minimum Wage on the Wage Distribution in a Low-Wage Sector," Royal Economic Society Annual Conference 2003 60, Royal Economic Society.
  21. Thomas R. Michl, 2000. "Can Rescheduling Explain the New Jersey Minimum Wage Studies?," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 265-276, Summer.
  22. Zavodny, Madeline, 2000. "The effect of the minimum wage on employment and hours," Labour Economics, Elsevier, vol. 7(6), pages 729-750, November.
  23. Kenneth A. Couch & David C. Wittenburg, 2001. "The Response of Hours of Work to Increases in the Minimum Wage," Southern Economic Journal, Southern Economic Association, vol. 68(1), pages 171-177, July.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Purnell's market confusion
    by chris dillow in Stumbling and Mumbling on 2010-02-17 13:25:45
  2. Minimum wage: who benefits?
    by chris dillow in Stumbling and Mumbling on 2007-03-07 12:27:08
  3. What do minimum wages do?
    by chris dillow in Stumbling and Mumbling on 2006-10-16 09:23:17
  4. Kinked demand curves
    by chris dillow in Stumbling and Mumbling on 2006-06-12 11:27:19
  5. The Chigley politics of the living wage
    by chris dillow in Stumbling and Mumbling on 2012-11-05 14:40:27
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Andrew Benito & Jumana Saleheen, 2013. "Labour Supply as a Buffer: Evidence from UK Households," Economica, London School of Economics and Political Science, vol. 80(320), pages 698-720, October.
  2. Robinson, Helen & Wadsworth, Jonathan, 2006. "The Impact of the Minimum Wage on the Incidence of Second Job Holding in Britain," Cardiff Economics Working Papers E2006/14, Cardiff University, Cardiff Business School, Economics Section.
  3. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
  4. Strobl, Eric & Walsh, Frank, 2007. "Dealing with monopsony power: Employment subsidies vs. minimum wages," Economics Letters, Elsevier, vol. 94(1), pages 83-89, January.
  5. Patricia Rice, 2010. "Minimum Wages and Schooling: Evidence from the UK s Introduction of a National Minimum Wage," SERC Discussion Papers 0050, Spatial Economics Research Centre, LSE.
  6. Jonathan Wadsworth, 2009. "Did the national minimum wage affect UK prices?," LSE Research Online Documents on Economics 28677, London School of Economics and Political Science, LSE Library.
  7. Strobl, Eric & Walsh, Frank, 2008. "The Ambiguous Effect of Minimum Wages on Workers and Total Hours," IZA Discussion Papers 3643, Institute for the Study of Labor (IZA).
  8. Jonathan Wadsworth, 2009. "Did the National Minimum Wage Affect UK Prices?," CEP Discussion Papers dp0947, Centre for Economic Performance, LSE.
  9. Blundell, Richard & Brewer, Mike & Francesconi, Marco, 2007. "Job Changes and Hours Changes: Understanding the Path of Labour Supply Adjustment," IZA Discussion Papers 3044, Institute for the Study of Labor (IZA).
  10. Richard Blundell & Mike Brewer & Marco Francesconi, 2005. "Job changes, hours changes and the path of labour supply adjustment," IFS Working Papers W05/21, Institute for Fiscal Studies.
  11. Eric Strobl & Frank Walsh, 2010. "The Minimum Wage and Hours per Worker," Working Papers 201028, School Of Economics, University College Dublin.
  12. Teresa Schl├╝ter, 2013. "Real Wages, Amenities and the Adjustment of Working Hours Across Regional Labour Markets," SERC Discussion Papers 0130, Spatial Economics Research Centre, LSE.
  13. Patricia Rice, 2010. "Minimum wages and schooling: evidence from the UK's introduction of a national minimum wage," LSE Research Online Documents on Economics 33515, London School of Economics and Political Science, LSE Library.
  14. Strobl, Eric & Walsh, Frank, 2011. "The ambiguous effect of minimum wages on hours," Labour Economics, Elsevier, vol. 18(2), pages 218-228, April.

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