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The Effects of Minimum Wages on Employment: Theory and Evidence from Britain

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  • Richard Dickens
  • Stephen Machin
  • Alan Manning

Abstract

Since the abolition of the Wages Councils in September 1993, agriculture is the only sector in the UK economy covered by any form of minimum wage legislation. This paper investigates the impact of the system of minimum wages on the level and structure of earnings and employment in agriculture. On wages, our main conclusion is that the minimum wages set by the AWBs are important determinants of the average level and distribution of earnings in UK agriculture. On employment, our main conclusion is that there is no evidence that minimum wages have reduced the level of employment in agriculture. If anything, our estimates imply a weak positive impact of minimum wages on employment. There are no significant differences between men and women.

Suggested Citation

  • 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.
  • Handle: RePEc:cep:cepdps:dp0183
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    References listed on IDEAS

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    1. Kaufman, Roger T, 1989. "The Effects of Statutory Minimum Rates of Pay on Employment in Great Britain," Economic Journal, Royal Economic Society, vol. 99(398), pages 1040-1053, December.
    2. Stephen Machin & Alan Manning & S Woodland, 1993. "Are Workers Paid their Marginal Product? Evidence from a Low Wage Labour Market," CEP Discussion Papers dp0158, Centre for Economic Performance, LSE.
    3. Nickell, Stephen J & Wadhwani, Sushil, 1990. "Insider Forces and Wage Determination," Economic Journal, Royal Economic Society, vol. 100(401), pages 496-509, June.
    4. Richard Dickens & Paul Gregg & Stephen Machin & Alan Manning & Jonathan Wadsworth, 1993. "Wages Councils: Was There a Case for Abolition?," British Journal of Industrial Relations, London School of Economics, vol. 31(4), pages 515-529, December.
    5. Sullivan, Daniel, 1989. "Monopsony Power in the Market for Nurses," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages 135-178, October.
    6. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    8. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
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