- Home
- Publications
- The Impact Of The Introduction Of The National Living Wage On Employment, Hours And Wages
The Impact of the Introduction of the National Living Wage on Employment, Hours and Wages
In 2015 the UK government announced the introduction of a new `National Living Wage' (NLW) that would apply to those aged 25 and above from April 2016. At a rate of £7.20, this represented a significant increase of 7.5% over the existing National Minimum Wage (NMW) rate. Previous research has generally found, with some exceptions, that the NMW has raised the earnings of low paid workers, without significantly affecting their employment opportunities. The relatively large increase in the wage floor with the introduction of the NLW, and plans to raise the NLW to 60% of median earnings by 2020, raise the possibility of detrimental effects on employment retention and hours worked.
In this report for the Low Pay Commission we use a difference-in-differences approach and data from the Annual Survey of Hours and Earnings to examine the effects of the NLW introduction and April 2017 uprating on employment retention and hours worked. Overall we nd that recent NLW upratings have increased wages for the low paid with generally little adverse effect on employment retention. However, consistent with previous research, we do and some evidence of adverse effects on the employment retention rates of women working part-time. We also find evidence of a reduction in employment retention for some of the lowest paid workers in the retail industries.
To see the others contributions to the Low Pay Commission research click here
Related Blog Posts
Breaking Down the Different Types of Pension in the UK
Robyn Smith
Adrian Pabst
25 Mar 2024
6 min read
What Are the Implications of the Rising National Minimum Wage and National Living Wage Rates?
Ekaterina Aleynikova
Adrian Pabst
19 Mar 2024
5 min read
How Changes in Migration Policy Could Boost Scotland’s Economy
Max Mosley
Ekaterina Aleynikova
18 Dec 2023
3 min read
Related Projects
Related News
Press Release: Compositional effects push up average weekly earnings at the end of 2020
26 Jan 2021
2 min read
Press Release: 2020 shaping up to be the worst year for total pay growth since 2009
15 Dec 2020
2 min read
Related Publications
The Nature of the Inflationary Surprise in Europe and the USA
21 Mar 2024
Discussion Papers
Pay-Setting Among Employers in the Agriculture, Cleaning, Hospitality and Retail Sectors
11 Mar 2024
Research Report
Energy and Climate Policy in a DSGE Model of the United Kingdom
08 Mar 2024
Discussion Papers
Job Boom or Job Bust? The Effect of the Pandemic on Actual and Measured Job and Employment Growth
07 Feb 2024
UK Economic Outlook Box Analysis