The UK national minimum wage's impact on productivity

Marian Rizov, Richard Croucher and Thomas Lange

EconStor Open Access Articles and Book Chapters, 2016, vol. 27, issue 4, 819-835

Abstract: Low pay poses issues for managers internationally. We examine productivity in low-paying sectors in Britain, since the National Minimum Wage’s (NMW) introduction. We use a multiple channel analytical strategy, emphasising the wage-incentives channel and linking it to a model of unobserved productivity. We estimate firm-specific productivity measures and aggregate them to the level of low-paying sectors. Difference-in-differences analysis illustrates that the NMW positively affected aggregate low-paying sector productivity. These findings highlight increased wages’ incentive effects with implications for management practice and public policy since ‘living’ wages may be productivity enhancing.

Keywords: minimum wage; incentives; productivity; UK (search for similar items in EconPapers)
JEL-codes: D22 D24 J30 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:183132

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