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A Persistence Model of the National Minimum Wage

Author

Listed:
  • Jones, Richard J.

    () (Swansea University)

  • Murphy, Philip D.

    () (Swansea University)

  • Sloane, Peter J.

    () (Swansea University)

Abstract

This paper utilises the panel element of the BHPS (waves 9 to 14) to examine the dynamics of the National Minimum Wage (NMW) introduced to Britain in 1999. Specifically a persistence measure based on a random effects probit model for those affected by the NMW is constructed. The conditional probabilities imply some degree of state dependence, but there is also a considerable amount of turnover from one year to the next among those affected by the NMW.

Suggested Citation

  • Jones, Richard J. & Murphy, Philip D. & Sloane, Peter J., 2007. "A Persistence Model of the National Minimum Wage," IZA Discussion Papers 2595, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2595
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    References listed on IDEAS

    as
    1. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series 1232, CESifo Group Munich.
    2. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    3. Sara Lemos, 2004. "Are Wage and Employment Effects Robust to Alternative Minimum Wage Variables?," Discussion Papers in Economics 04/4, Department of Economics, University of Leicester.
    4. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    5. Robinson, Helen, 2002. " Wrong Side of the Track? The Impact of the Minimum Wage on Gender Pay Gaps in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(5), pages 417-448, December.
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    More about this item

    Keywords

    National Minimum Wage; state dependence; wage mobility;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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