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The UK Minimum Wage at Age 22: A Regression Discontinuity Approach

Author

Listed:
  • Richard Dickens

    (Department of Economics, University of Sussex
    Centre for Economic Performance, London School of Economics)

  • Rebecca Riley

    (National Institute of Economic and Social Research
    LLAKES, Institute of Education)

  • David Wilkinson

    (National Institute of Economic and Social Research)

Abstract

A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK National Minimum Wage (NMW) that occurs at age 22 on various labour market outcomes. Using data from the Labour Force Survey we find a 2- 4% point increase in the employment rate of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the NMW was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests.

Suggested Citation

  • Richard Dickens & Rebecca Riley & David Wilkinson, 2011. "The UK Minimum Wage at Age 22: A Regression Discontinuity Approach," Working Paper Series 2111, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:2111
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    File URL: http://www.sussex.ac.uk/economics/documents/wps-21-2011.pdf
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    References listed on IDEAS

    as
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    3. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    4. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626, November.
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    6. Linneman, Peter, 1982. "The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 443-469, June.
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    8. Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, March.
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    13. repec:bla:obuest:v:64:y:2002:i:s1:p:583-605 is not listed on IDEAS
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The UK Minimum Wage at Age 22: A Regression Discontinuity Approach
      by maximorossi in NEP-LTV blog on 2011-07-29 02:21:20
    2. Costs of the living wage
      by chris in Stumbling and Mumbling on 2016-02-02 19:22:11

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    Cited by:

    1. Robayo,Monica & Terskaya,Anastasia & Koettl-Brodmann,Stefanie, 2020. "Ex-ante Evaluation of the Impact of Increases in Minimum Wages on Labor Market Outcomes in Kosovo," Policy Research Working Paper Series 9357, The World Bank.
    2. Richard Dickens & Alan Manning & Tim Butcher, 2012. "Minimum Wages and Wage Inequality: Some Theory and an Application to the UK," Working Paper Series 4512, Department of Economics, University of Sussex Business School.
    3. BARGAIN Olivier & DOORLEY Karina & VAN KERM Philippe, 2016. "Minimum wages and the gender gap in pay. Evidence from the UK and Ireland," LISER Working Paper Series 2016-02, Luxembourg Institute of Socio-Economic Research (LISER).

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    More about this item

    Keywords

    Minimum Wage Legislation; Low Wage;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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