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Minimum wage hikes and the wage growth of low-wage workers

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Publication details

JournalBulletin of Economic Research
DateE-pub ahead of print - 15 Nov 2013
DatePublished (current) - Oct 2014
Issue number4
Volume66
Pages (from-to)384–405
Early online date15/11/13
Original languageEnglish

Abstract

This paper presents difference-in-differences estimates of the impact of the British minimum wage on the wage growth of low-wage employees. Estimates of the probability of low-wage employees receiving positive wage growth have been significantly increased by the minimum wage upratings or hikes. However, whether the actual wage growth of these workers has been significantly raised or not depends crucially on the magnitude of the minimum wage hike considered. Findings are consistent with employers complying with the legally binding minimum wage but holding down or offsetting the wage growth that they might have awarded in periods of relatively low minimum wage hikes.

    Research areas

  • difference-in-differences estimator, measurement error, minimum wages, wage growth

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