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Estimating the effect of minimum wages on employment from the distribution of wages: a critical view

Dickens, Richard and Machin, Stephen and Manning, Alan (1994) Estimating the effect of minimum wages on employment from the distribution of wages: a critical view. CEP Discussion Papers, CEPDP0203. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP0203

Abstract

In two papers, Meyer and Wise (1983a,b) present an ingenious method for estimating the effect of minimum wage rates on wages and employment using data based only on the observed cross-sectional distribution of wages. They, and others who have used this method, have generally found that the minimum wage causes substantial losses in employment. In this paper we evaluate the robustness of this technique. We argue that the estimates, at least for the UK, are very sensitive to the functional form assumed for the distribution of wages and to the assumption made about how far up the wage distribution the minimum wage has spillover effects.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 1994 The Authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 12 Aug 2013 11:52
Last Modified: 12 Aug 2013 11:52
URI: http://eprints.lse.ac.uk/id/eprint/51648

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