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Minimum Wages

  • Stephen Machin
  • Alan Manning

Debate about the effect of minimum wages on employment in the United Kingdom has not paid much attention to the impact of the existing system of minimum wages, the Wages Council. In this paper, we look at the consequences of the declining importance of the Wages Council in the 1980s for wage inequality and employment in the covered industries. We find that there has been a significant increase in wage inequality as a result of the failure to raise minimum wages in line with earnings, but there is no evidence that the declining minimum produced any beneficial employment effects. If anything, there seems to be a positive correlation between minimum wages and employment, an effect that seems particularly strong in the catering sector.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0080.

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Date of creation: Jun 1992
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Handle: RePEc:cep:cepdps:dp0080
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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