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Identifying the employment effect of invoking and changing the minimum wage: A spatial analysis of the UK

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  • Dolton, Peter
  • Bondibene, Chiara Rosazza
  • Stops, Michael

Abstract

This paper assesses the impact of the National Minimum Wage (NMW) on employment in the UK over the 1999–2010 period explicitly modelling the effect of the 2008–2010 recession. Identification of invoking a NMW is possible by reference to a pre-period (prior to 1999) without a NMW. Separate identification of the effect of incremental changes (and year interaction effects) in the NMW is facilitated by variation in the bite of the NMW across local labour markets. We address the issues of possible endogeneity and dynamic structure of employment rate changes, regional demand side shocks induced by the recession, and take account of the spatial dependence of local labour markets. Using system GMM, we conclude that there is no discernable effect of the NMW introduction or its uprating on employment but show how more naïve estimation may have revealed the various widely different positive and negative effects found in the literature.

Suggested Citation

  • Dolton, Peter & Bondibene, Chiara Rosazza & Stops, Michael, 2015. "Identifying the employment effect of invoking and changing the minimum wage: A spatial analysis of the UK," Labour Economics, Elsevier, vol. 37(C), pages 54-76.
  • Handle: RePEc:eee:labeco:v:37:y:2015:i:c:p:54-76
    DOI: 10.1016/j.labeco.2015.09.002
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    Cited by:

    1. Brian Bell & Stephen Machin, 2018. "Minimum Wages and Firm Value," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 159-195.
    2. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2017. "The Short-Run Employment Effects of the German Minimum Wage Reform," SOEPpapers on Multidisciplinary Panel Data Research 950, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. repec:eee:labeco:v:47:y:2017:i:c:p:163-181 is not listed on IDEAS
    4. repec:esr:resser:bkmnext332 is not listed on IDEAS
    5. repec:bla:scotjp:v:64:y:2017:i:4:p:327-348 is not listed on IDEAS
    6. repec:bla:labour:v:31:y:2017:i:4:p:480-493 is not listed on IDEAS
    7. Bossler, Mario & Broszeit, Sandra, 2016. "Do minimum wages increase job satisfaction? : micro data evidence from the new German minimum wage," IAB Discussion Paper 201615, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Bossler, Mario & Gerner, Hans-Dieter, 2016. "Employment effects of the new German minimum wage: Evidence from establishment-level micro data," Annual Conference 2016 (Augsburg): Demographic Change 145926, Verein für Socialpolitik / German Economic Association.
    9. Filiz Gülal & Adam Ayaita, 2018. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-Experiment in Germany," SOEPpapers on Multidisciplinary Panel Data Research 969, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Rebecca Riley & Chiara Rosazza-Bondibene, 2015. "Raising the Standard: Minimum Wages and Firm Productivity," National Institute of Economic and Social Research (NIESR) Discussion Papers 449, National Institute of Economic and Social Research.
    11. repec:bla:ecorec:v:93:y:2017:i::p:1-15 is not listed on IDEAS
    12. Bossler, Mario & Gerner, Hans-Dieter, 2016. "Employment effects of the new German minimum wage : evidence from establishment-level micro data," IAB Discussion Paper 201610, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Marco Caliendo & Alexandra Fedorets & Malte Preuss & Carsten Schröder & Linda Wittbrodt, 2017. "The Short-Term Distributional Effects of the German Minimum Wage Reform," SOEPpapers on Multidisciplinary Panel Data Research 948, DIW Berlin, The German Socio-Economic Panel (SOEP).
    14. repec:bla:manchs:v:85:y:2017:i:5:p:601-633 is not listed on IDEAS

    More about this item

    Keywords

    Minimum wage; Employment; Spatial dependence;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other

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