The Impact of the National Minimum Wage in Small Firms

22 Pages Posted: 22 Sep 2003

See all articles by James Arrowsmith

James Arrowsmith

University of Warwick - Department of Computer Science

Mark W. Gilman

University of Kent, Canterbury

Paul K. Edwards

University of Warwick - Warwick Business School

Monder Ram

De Montfort University - School of Business; University of Birmingham - Birmingham Business School

Abstract

The introduction of the National Minimum Wage (NMW) had potentially significant implications for small firms. Orthodox economic theory predicts adverse consequences, though institutional analysis points to potential efficiency as well as fairness effects. Using longitudinal data on 55 firms, this paper examines the impact of the NMW in small firms in clothing manufacture and hotel and catering. Different patterns of adjustment were observed, explained by both size and sector characteristics. Overall, the impact of the NMW was mediated by the informality of employment relations in the small firm.

Suggested Citation

Arrowsmith, James and Gilman, Mark W. and Edwards, Paul K. and Ram, Monder, The Impact of the National Minimum Wage in Small Firms. British Journal of Industrial Relations, Vol. 41, pp. 435-456, September 2003. Available at SSRN: https://ssrn.com/abstract=437262

James Arrowsmith (Contact Author)

University of Warwick - Department of Computer Science ( email )

Dept of Computer Science
Coventry CV4 7AL, CV4 7AL
United Kingdom

Mark W. Gilman

University of Kent, Canterbury ( email )

Canterbury Business School
Canterbury, Kent CT2 7PE
United Kingdom

Paul K. Edwards

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Monder Ram

De Montfort University - School of Business ( email )

Department of Corporate Strategy
Leicester LE1 9BH
United Kingdom
+44 116 255.1551 (Phone)
+44 116 251.7548 (Fax)

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

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