The Effects of Statutory Minimum Rates of Pay on Employment in Great Britain

Roger Kaufman ()

Economic Journal, 1989, vol. 99, issue 398, 1040-53

Abstract: Estimates of the employment effects of statutory minimum rates of pay are derived for Great Britain. Using a constant elasticity of substitution production function, the author estimates the partial elasticities of substitution in those industries covered by statutory minimum rates to be between 0.45 and 0.85. He then develops a bargaining model and estimates that the elasticity of the average wage rate in these industries with respect to the statutory minimum rate is zero for men and between 0.07 and 0.15 for women. Combining these estimates yields -0.06 as the approximate total employment elasticity of statutory minimum rates. Copyright 1989 by Royal Economic Society.

Date: 1989
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