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The effect of minimum wages on employment: theory and evidence from Britain

Dickens, Richard, Machin, Stephen and Manning, Alan ORCID: 0000-0002-7884-3580 (1999) The effect of minimum wages on employment: theory and evidence from Britain. Journal of Labor Economics, 17 (1). pp. 1-23. ISSN 0734-306X

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Identification Number: 10.1086/209911


Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We present a general theoretical model whereby employers have some degree of monopsony power, which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact. Studying the industry‐based British Wages Councils between 1975 and 1992, we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment.

Item Type: Article
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Additional Information: © 1999 University of Chicago Press
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
JEL classification: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General
Date Deposited: 25 Jun 2008 09:29
Last Modified: 01 Jun 2024 23:21

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