The impact of the 2006 National Minimum Wage rise on employment

Ian Mulheirn
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Ian Mulheirn: Formerly HM Treasury

Economic & Labour Market Review, 2008, vol. 2, issue 9, 30-36

Abstract: Evaluates the impact of the October 2006 rise on the rate at which people leave employmentThe National Minimum Wage (NMW) has risen ahead of earnings since its introduction in 1999. In October 2006, with coverage at its highest level ever,the adult NMW increased by 5.9 per cent, to £5.35 per hour, the largest proportionate rise since 2004. While previous assessments have failed to find any clear evidence of a negative impact on employment, it is of interest to see whether more recent NMW rises have reduced employment. This analysis evaluates the impact of the October 2006 rise in the NMW on the rate at which people leave employment. Results show no evidence of an increased job exit rate among those directly affected by the rise. Indeed, there is some indication of a positive effect on job retention for men. The analysis therefore provides no reason to think that the minimum wage rise in October 2006 caused employees to be made redundant. Economic & Labour Market Review (2008) 2, 30–36; doi:10.1057/elmr.2008.137

Date: 2008
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