Essats on minimum wages: an evaluation of their impact on labour market outcomes

• Main Author: Bondibene, Chiara Rosazza
• Published: University of London 2012
• Subjects: 331.21
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.588763

This thesis evaluates the impact of minimum wages on labour market outcomes, exploiting variation in its "bite" across areas and years. In the UK, a National Minimum Wage (NMW) was introduced in 1999 and has been up-rated each year since. This rather extended length of time since implementation constitutes an opportunity to take a retrospective look at the impact of this policy. Identification is based on variation in the "bite" of the NMW across local labour markets and the different sized year on year up-ratings. An "Incremental Difference-in- Differences" (ID iD) model is used in which each year's change in the NMW is considered as a separate interaction effect. This IDiD procedure allows one to evaluate the year-on-year impact of the up-rating of the NMW on different labour market outcomes. The effect of the NMW on UK wage inequality is also assessed. In order to identify the effect of this policy on the distribution of earnings, the strategy applied in the US by Lee (1999) and more recently by Autor et al (2010) is used. Variation in the relative level of the NMW across local areas is exploited in order to disentangle the NMW effect from movements in latent wage dispersion. Finally, new estimates of the employment effects of the Minimum Wage (MW) are produced focusing on a panel of 33 OECD and European countries for the period 1971- 2009. Cross-national variation in the level and timing of the MW up-rating is exploited. The panel allows one to take into account the institutional and other policy related differences that might have an impact on employment other than the MW. It also allows one to differentiate the effect of the MW on employment in periods of economic downturn as well as in periods of economic growth, exploiting the exact timing of the recessionary experiences in different countries. 3