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Did the national minimum wage affect UK prices?

Wadsworth, Jonathan (2009) Did the national minimum wage affect UK prices? CEP Discussion Paper, No. 947. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could have passed on any higher labour costs resulting from the minimum wage in the form of higher prices. This study looks at the effects of the minimum wage on the prices of UK goods and services by comparing prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with prices of goods and services that make less use of minimum wage labour. Using sectoral-level price data matched to LFS survey data on the share of minimum wage workers in each sector, it is hard to find much evidence of significant price changes in the months that correspond immediately to the uprating of the NMW. However over the longer term, prices in several minimum wage sectors – notably take-away foods, canteen meals, hotel services and domestic services - do appear to have risen significantly faster than prices of non-minimum wage sectors. These effects were particularly significant in the four years immediately after the introduction of the minimum wage.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2009 The author
Library of Congress subject classification: H Social Sciences > HB Economic Theory
D History General and Old World > DA Great Britain
Journal of Economic Literature Classification System: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: No. 947
Date Deposited: 16 Jul 2010 14:58
URL: http://eprints.lse.ac.uk/28677/

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