The impact of the National Minimum Wage on employment and hours

The aim of this research is to explore the impact of the uprating of the UK National Minimum Wage on employment and hours through the recession and subsequent recovery. There is a particular interest in how recent upratings have affected the low-paying sectors and low-paid workers and whether there have been differential impacts for certain age groups.

Methods

The research questions will be addressed using the Labour Force Survey (LFS) and the Annual Survey of Hours and Earnings (ASHE) microdata.  Difference-in-differences methods will be used to assess the impact of the NMW, with a particular focus on the impact of uprating since the economic downturn i.e. from the October 2008 uprating onwards.  The impact of the recession will be assessed by extending the standard difference-in-differences model by adding a term to capture the interaction between the impact of the NMW and the state of the economy.  A number of approaches will be used to assess the robustness of the results, including producing estimates using both ASHE and the LFS, varying the comparison groups and carrying out a local area analysis to supplement the analysis of individual-level data.

Timescale and funder

This project is funded by the Low Pay Commission.  It began in March 2014 and the findings will be published alongside the 2015 Low Pay Commission report.