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

Machin, Stephen, Manning, Alan and Rahman, Lupin (2002) Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector. CEPDP, 544. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 075301565X

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Abstract

Between 1993 and April 1999 there was no minimum wage in the UK (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 is a sector one can view 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 homes 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, but there appears to be no effect on home closure.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2002 the authors
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Research centres and groups > Centre for the Economics of Education (CEE)
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 544
Date Deposited: 29 Jul 2008 08:42
URL: http://eprints.lse.ac.uk/20070/

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