Employment, Inequality and the UK National Minimum Wage Over the Medium-Term

29 Pages Posted: 6 Jan 2012  

Peter Dolton

University of London - Royal Holloway College

Chiara Rosazza Bondibene

University of London - School of Economics & Finance

Jonathan Wadsworth

University of London - Royal Holloway College

Date Written: February 2012

Abstract

We assess the impact of the national minimum wage (NMW) on employment and inequality in the UK over the decade since its introduction. We evaluate its effects in each year, using an incremental differences‐in‐differences (IDiD) estimator. Identification is based on variation in the bite of the NMW across local labour markets and the different sized year on year up‐ratings. We find that an increased bite of the NMW is associated with falls in lower tail wage inequality. While the average employment effect over the entire period is broadly neutral, there are small but significant positive NMW effects from 2003 onwards.

JEL Classification: E24, J31, J42, R12

Suggested Citation

Dolton, Peter and Bondibene, Chiara Rosazza and Wadsworth, Jonathan, Employment, Inequality and the UK National Minimum Wage Over the Medium-Term (February 2012). Oxford Bulletin of Economics and Statistics, Vol. 74, Issue 1, pp. 78-106, 2012. Available at SSRN: https://ssrn.com/abstract=1980556 or http://dx.doi.org/10.1111/j.1468-0084.2011.00653.x

Peter Dolton

University of London - Royal Holloway College ( email )

Senate House
Malet Street
London, TW20 0EX
United Kingdom

Chiara Rosazza Bondibene

University of London - School of Economics & Finance ( email )

Mile End Road
London, SE9 2ZP
United Kingdom

Jonathan Wadsworth

University of London - Royal Holloway College ( email )

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