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National minimum wage and labour market outcomes of young workers

Listed author(s):
  • Tena, Juan de Dios
  • Fidrmuc, Jan

We analyze the impact of the national minimum wage (NMW) in the UK on the employment of young workers. We utilize the regression discontinuity approach to assess the impact of age-related increases in the NMW when workers turn 18 and 22. The previous literature has found little evidence of an adverse impact of the NMW on the UK labour market, both when considering the age-related increases or the regular annual increases that apply to all NMW rates. We fail to find any effect of turning 22 on employment. However, we find a significant and negative effect of male workers turning 21. We also find a negative effect for both genders upon turning 18. The age-related NMW rates may have an adverse effect on employment of young workers, with this effect possibly occurring already well in advance of reaching the threshold age.

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File URL: http://e-archivo.uc3m.es/bitstream/handle/10016/14481/ws121209.pdf?sequence=1
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Paper provided by Universidad Carlos III de Madrid. Departamento de Estadística in its series DES - Working Papers. Statistics and Econometrics. WS with number ws121209.

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Date of creation: Jun 2012
Handle: RePEc:cte:wsrepe:ws121209
Contact details of provider: Web page: http://portal.uc3m.es/portal/page/portal/dpto_estadistica

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  1. 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 772-793, September.
  2. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
  3. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages 110-116, 03.
  4. Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 311-325, August.
  5. Salant, Stephen W & Henderson, Dale W, 1978. "Market Anticipations of Government Policies and the Price of Gold," Journal of Political Economy, University of Chicago Press, vol. 86(4), pages 627-648, August.
  6. Peter Dolton & Chiara Rosazza Bondibene, 2012. "The international experience of minimum wages in an economic downturn," Economic Policy, CEPR;CES;MSH, vol. 27(69), pages 99-142, 01.
  7. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004. "Training and the new minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages 87-94, 03.
  8. 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, vol. 17(1), pages 1-22, January.
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