Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector

Stephen Machin, Alan Manning and Lupin Rahman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Between 1993 and April 1999 there was no minimum wage in the United Kingdom (except in agriculture). In this paper we study the effects of the introduction of a National Minimum Wage (NMW) in April 1999 on one heavily affected sector, the residential care homes industry. This sector contains a large number of low paid workers and as such can be viewed as being very vulnerable to minimum wage legislation. We look at the impact on both wages and employment. Our results suggest that the minimum wage raised the wages of a large number of care home workers, causing a very big wage compression of the lower end of the wage distribution, thereby strongly reducing wage inequality. There is some evidence of employment and hours reductions after the minimum wage introduction, though the estimated effects are not that sizable given how heavily the wage structure was affected

JEL-codes: J30 J4 J8 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2003-03-01
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Citations: View citations in EconPapers (134)

Published in Journal of the European Economic Association, 1, March, 2003, 1(1), pp. 154 - 180. ISSN: 1542-4774

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http://eprints.lse.ac.uk/2452/ Open access version. (application/pdf)

Related works:
Working Paper: Where Minimum Wage Bites Hard: The Introduction of the UK National Minimum Wage to a Low Wage Sector (2003)
Working Paper: Where the Minimum Wage Bites Hard: the Introduction of the UK National Minimum Wage to a Low Wage Sector (2002)
Working Paper: Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:2452

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